What Is A Credit Check?
A credit check is the financial check taken by lenders when you request a loan or need to borrow money. The lender uses this as an essential part of the loan request process. The check helps the lender determine whether you will be able to afford the loan repayments. By assessing your circumstances and looking at your financial history, a lender can better evaluate whether to approve your loan request.
Beyond this, it is not uncommon to have a credit check when renting out an apartment, taking out insurance, buying a cell phone or even getting a job. A credit check tells a lot about your creditworthiness and ability to make financial commitments on time.
How Is A Credit Check Carried Out?
A lender will ask your permission to access your financial information. They can then view your financial transactions and decide whether it looks like you can afford a loan. The credit check is an automatic process, and you will not need to provide the information to the lender.
What Can A Lender See When They Carry Out A Credit Check?
In most cases, when a payday lender performs a credit check, they will be able to see your basic personal information, financial history, and current circumstances. A lender can view your full name, date of birth, and electoral roll information, which confirms your current and previous addresses.
You will typically have a credit score, where the higher the score, the better and lenders may have a cut off or threshold with a number that they are willing to lend to.
A credit check gives the necessary financial information to your lender. They can view all loans, credit cards, and mortgage accounts that are open, as well as the start date and loan amounts. All accounts closed in the last six years will be listed. The check will also show all current and joint accounts and any overdraft. Previous loan request searches and footprints may also be included. Importantly, the lender will want to consider any history of Missed repayments or debt, including bankruptcy and CCJs. Information can also be accessed on whether your identity has been used for fraud.
Will I Receive A Credit Check?
You will receive a credit check when you submit an enquiry for any loan. It is an automatic part of the loan request process and relates to everyone. In this way, lenders try to avoid the difficult circumstances that can occur when someone can’t afford to meet loan repayments.
Do I Need A Credit Check For A Payday Loan?
Yes. A credit check is a mandatory and automatic part of the loan request process for a payday loan. It allows the payday lender to make an informed decision on providing you with the money you need. This does not mean that you will be denied a loan if you have a poor credit score. Pheabs is willing to consider loan enquiries with a range of credit histories. However, a credit check is still always carried out.