What is a Credit Check?

Checking a credit score

When you apply for a personal loan or line of credit, or you’re trying to get a new credit card or credit limit increase on an existing card, your potential lender or card issuer will often require a credit check. What is a credit check, you may be asking? A credit check shows lenders a comprehensive overview of your financial standing as a potential borrower. They can use the credit check to help determine how likely you will be to make your payments in-full and on-time, which is why it’s so important to have a good credit score and a healthy credit report that’s free of missed payments. Keep reading to learn more about the following topics with Xpress Cash:

  • What is a soft credit check?
  • What is a hard credit check?
  • What shows up on a credit check?

What is a Soft Credit Check?

If you’re applying online to see if you pre-qualify for loans or credit cards, a soft credit check is usually required. Rather than showing your full credit history, soft credit checks only provide a snapshot. Soft credit checks are useful because they don’t appear on your credit report and have no effect on your credit score. You can use them to find out if you’re pre-qualified, so you’ll know whether it’s worth submitting an official application, which would require a hard credit check.

What is a Hard Credit Check?

If a soft credit check shows that you pre-qualify for a loan or credit card and you want to move forward with an official application, this will bring up the need for a hard credit check. Here, a lender will view your credit report in full and use it to decide whether they want to approve you. The majority of individuals cannot avoid a hard credit check every now and then. Unfortunately, hard credit checks will appear on your credit report and will affect your credit score. The good news, however, is that the ding is temporary, and usually only shaves about five points off your score.

What Shows Up on a Credit Check?

When a lender does a credit check on you, here’s an overview of what they’ll have access to:

  • Your full name, date of birth, and address history (including your current place of residence)
  • All of your credit accounts, including loans, mortgages, credit cards, etc. (this also includes joint accounts you’re apart of, such as a joint auto loan with your spouse)
  • Hard credit checks
  • Whether your account has been overdrafted
  • Fraud convictions
  • Whether you’ve ever been the victim of fraud
  • Your public records
  • Your voter registration status

Have Lingering Questions? Ask Xpress Cash!

When you’re navigating credit checks, credit scores, and how to raise them, Xpress Cash is here to help. Our financial experts throughout our Michigan locations can provide the advice you need – visit us or contact us online to get started today! Searching for a loan solution that doesn’t require a credit check? Ask about our cash advance services.