In general, Americans have credit scores ranging from 330 to 830.
Do you know what your credit score is? Even if you do, people such as landlords and loan providers may have asked to do a credit check.
What is a credit check exactly? And how does it affect your credit score?
Read on to find out the answers to these questions and more.
What Is a Credit Check?
A credit check is essentially when someone requests a credit report for your financial history. This is usually done before approval or denial for something major, such as a mortgage or an auto loan.
The person who requests the credit check can use the report to determine whether or not you’re responsible with your money. They can then assess if you’ll pay them on time, whether this is with utility bills or with a loan.
How Does a Credit Check Work?
A soft credit check is done to get a quick overview of certain aspects of your credit history. These won’t show up, which means they won’t affect your credit score. They’re usually used for pre-application processes.
Hard credit checks, on the other hand, will show up on your credit history, which means your credit score may be impacted. With a hard credit check, the requester will see everything in your credit history.
If you want to check your own credit score, that’s considered a soft check. No one can see how many times you’ve done so.
Do I Need a Credit Check for Loans?
In the majority of cases, you’ll need to get a credit check to obtain approval for loans. Think about it from the lender’s perspective: why would they take on risk with their money without ensuring the lendee will be responsible for it?
They need some reassurance before giving out any sum of money. Otherwise, they’d be in the red with non-payments.
Can I Get Loans Without a Credit Check?
If you need a loan quickly, then you might be wondering if you can get one without a credit check. While they’re rare, there are certainly some loans that don’t require credit checks.
However, do be aware that these will probably come with a caveat: higher interest rates. But so long as you can repay on time, this won’t matter too much.
Know the Facts About Credit Checks
So what is a credit check? It’s where a person or company pulls your credit history and report. By doing so, they’ll be able to see if you’re financially responsible.
Hard credit checks will affect your score, so make sure you’re not just applying for any loan you have a slight interest in.
If you keep applications to a minimum, then you’ll keep the credit checks to a minimum too. As a result, you’ll be able to retain your decent credit score while opening the lines of credit that are best for you.
If you found this article on credit checks informative, then please make sure you check out the rest of our blog!
