A credit check or credit report helps lenders find out about your credit history. It helps them assess whether you’re able, and likely, to meet loan repayments on time.
Your credit history, among other criteria, is used by lenders when deciding on whether to give you a personal loan or a much larger, longer term loan like a mortgage.
You’ll need to provide the lender with various information, including your address history and bank details. Credit reference agencies then supply any records of late payments and missed payments, and if you’ve had any county court judgements against you.
Your credit details will affect the amount you can borrow as well as the terms of your loan, such as the interest rate.
Your credit history will sometimes ‘wave a red flag’ if you’ve applied for multiple loans – whether or not you were accepted – and it could influence the decision. This is another good reason to thoroughly compare your options before actually making a loan application.