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Credit checks are really important to your financial life and can be the key to getting the best finance deal possible. There are a range of scenarios where a credit check may be performed against you but mainly they’re used by lenders to see how you can handle credit. When it comes to getting a car on finance through UK Car Finance, we stick to soft searches only as they won’t be recorded on your credit file or harm your credit score either. This makes the finance process a stress-free one and protects your current credit. If you’re unsure of what a credit check is and how to check your credit, read our credit check guide below.

searching credit report

What is a credit check? 

A credit check is when a company or finance lender asks to take a look at your credit file. It is an assessment of your financial history before a financial company considers lending you money. Once a credit check is performed, the lender will gain access to your credit report. Your credit report is held by three main credit reference agencies in the UK and shows your history of borrowing and your ability to meet repayments, including missed or late payments. Depending on the type of credit check performed, lenders may have access to different information on your credit report. 

When would a credit check be performed against you? 

There are a few scenarios in which a credit check may be performed on your credit file. In many cases, credit searches are used to see if you can be trusted to pay a potential loan or finance back on time and in full, based on your previous behaviours. Applicants who have missed payments in the past, have gone bankrupt or have no previous credit history, are more likely to default on finance in the future. This increases the risk to the lender and can influence their financial decision. A credit check may be performed against you if you apply for the following: 

  • Mortgages.
  • Car finance.
  • Personal loans.
  • Credit cards.
  • Mobile phone contracts. 
  • Store cards.
  • Renting a property.

See how much you could borrow!

What do lenders see when they perform a credit check on your report? 

When you give lenders permission to search your credit file, they can get access to a number of pieces of personal information about you. Depending on the type of credit search that is performed, finance companies could get access to the below. 

  • Your full name and date of birth.
  • Your current and previous addresses. 
  • Whether you’re registered on the electoral roll.
  • A list of credit accounts and repayments. 
  • Public records such as any CCJs, defaults, bankruptcies, debt relief orders or IVAs in your name. 
  • Any financial links to other people (joint finance accounts). 

In the UK, there are two types of credit checks that can be performed by lenders. Depending on which credit search is used, lenders can get access to either your full credit report or have limited access. 

Types of credit searches: 

What is a hard search credit check? 

A hard search credit check is when a lender performs a credit check on your file, with your permission, and gains full access to all the information listed above on your report. Each time a hard search is performed, it is recorded on your credit file and also shows lenders whether you have been declined or accepted for previous finance. Lenders can then use this information to decide whether they would like to offer you finance or not.

It’s worth noting that making multiple hard search credit checks in a short space of time can negatively impact your credit score. Your credit can be affected for around six months and it can reduce your ability to get finance in the future.

What is a soft search credit check? 

A soft search credit check is a less intrusive way for lenders to check your credit report and only gives them access to some of your information. A soft search is kind of like an initial look and more of an eligibility checker for finance instead of a full rundown of your credit history.

What’s even better about soft searches on your credit file is that they won’t be visible to lenders and aren’t recorded on your credit file. It doesn’t matter how many soft searches you make in a short space of time and they won’t affect your credit score either! If you’re shopping around for the lowest car finance interest rate, it’s best to stick to soft searches only to help protect your score.

Find out more about our soft check car finance deals.

Does car finance affect your credit score? 

Credit scores and car finance can be a bit of a double-edged sword. If you use your car finance correctly and meet each and every payment on time and in full, having a car on finance can help to increase your credit score. As long as you meet any other financial deadlines you have and keep credit usage low, you can get car finance with good credit, see easier acceptance and get access to better finance terms. 

Car finance can negatively impact your credit score in two ways. Firstly, if you make multiple hard searches for car finance in a short space of time or if secondly, you fail to stick to the terms of your credit agreement. When you miss payments or make late repayments, it can negatively impact your score and seriously affect your ability to get approved for finance in the future. 

Protect your credit score with UK Car Finance

protect your credit score

When you apply for car finance with us, we only use a soft search credit check and your credit score will not be affected. Once you’ve applied, we get straight to work finding you the best car finance deals from a wide range of trusted lenders. With the confidence that your credit score will be protected, we can help you get the car you want with affordable monthly payments! 

No credit impact

Make a free, no-obligation application with us today and you could be driving your new car in a matter of days! Choose from 100s of cars from reputable dealers and let us find you a low APR car finance deal that’s suited to your circumstances.


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