What Is A Credit Check? | Refresh Financial
Refresh Financial Official Blog

What Is A Credit Check?

What Is A Credit Check?

And how do credit checks affect me?

If an employer, bank, or other institution requests a credit check, it means they are looking to see a copy of your credit report. Your credit report is a detailed history of how you have paid your bills in the past. This includes payment history on current and past credit cards, bills, rent, and or any outstanding loans you have or have paid off recently.

Why Is My Credit Report Being Checked?

Your credit report is used to calculate your credit score.
Your credit score is used by companies and institutions to measure the likelihood that you are able to pay back your future debts, based on your past history. You can expect to have a credit check done before you enter the following agreements.

  • applying for a credit card
  • renting a home or apartment
  • signing a new cell phone contract
  • getting approved for an auto loan
  • applying for new insurance
  • applying for a new job

Related article: When are companies able to check your credit? We explore when employers, banks, wireless companies and more are able to check your credit, and more importantly when they aren’t. Read this article here.

A credit report includes both credit information and personal information that the reporting agency gathers about you. For example, the agencies track when and if you pay your debts. They also use information from public sources, like court records.

Do Credit Checks Hurt Your Credit Score?

Checking your credit score doesn't hurt your credit. In fact, it is the first step to improving your financial future. Canadians qualify for a free credit check every year. You can check your score for free here. You should get in the habit of doing this once a year in order to ensure there are no mistakes on your credit report as well as visualizing what it would take to rebuild your score.

However, this doesn't mean every type of credit check is harmless. Hard inquiries can negatively impact your credit score. A hard inquiry would be when you apply for any credit products. When you check your own score, it's considered a soft check. Before applying for new credit or entering any new agreement, it is important that you learn if it will be a soft or hard credit check.

Related article: What is a hard credit check and soft credit check?  We explore the differences between the tow in this article.

If you apply for several credit cards within a short period of time, multiple credit checks will appear on your report. For lenders, constant new credit can mean higher risk. That being said, most credit scores are not affected by multiple inquiries from auto, mortgage or student loan lenders within a short period of time.

For more credit score 101 and other key information, stay tuned to the Refresh Financial Dime Turner Blog. Also be sure to make yourself aware of the great credit rebuilding programs we have available online.

<< More Blog Posts

Leave a Reply

Not sure if we can help you?
Check out our products.

This is a short testimonial about your great customer service!!! I recently sent an e-mail to Refresh Financial about my changing circumstances and some questions that I needed answered. I received a prompt return phone call from Ally. After speaking with Ally, we were able to work out a new financial arrangement which would keep my program  in tact and continue to help re-build my credit rating. There would be no penalties for making the change and would help me in pursuing my other financial goals. I am happy with Refresh and the new program  arrangement. I am very happy with Ally—she deserves a 5-star rating on customer service.”

Bill, Hamilton, ON