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Are you in the dark when it comes to credit checks

Are you in the dark when it comes to credit checks

Category: Credit cards

Updated: 26/05/2016
First Published: 26/05/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Do you know when you'll be credit checked? According to research from Amigo, a worrying number of people are in the dark, which could actually mean they're less likely to be accepted for credit in the future.

The figures show that 80% of respondents were unaware that they'd be credit checked when applying for a job, and 63% didn't know that arranging monthly insurance instalments would also result in a credit check. So, too, will arranging direct debit payments for gas and electricity – something that 56% of respondents were unaware of – as will renting a flat (50%).

Perhaps more surprisingly, 49% weren't aware that they'll be credit checked for an overdraft extension and 42% didn't know they'd be assessed for a store card, while car finance and personal loans could also catch people out, with 27% and 24% respectively not being aware of the checking requirements.

But what about when you're making a mortgage or credit card application? Here, too, a worrying number of people were unaware that they'd be credit checked, with the figure standing at 22% and 19% respectively. This could, unintentionally, lead to people's credit scores worsening – if they aren't aware they'll be credit checked they may repeatedly apply for credit cards if they're turned down, and a high number of checks will leave black marks on a credit score.

Worse still, if the individual is declined, the score can be damaged even further, creating a vicious circle that could seriously impact a person's ability to secure credit in the future – a poor credit score indicates you're a lending risk, which means that lenders will be less likely to approve you.

"There is a huge lack of understanding about when you'll be credit checked and for which products," said Glen Crawford, CEO at Amigo Loans. "The days when you would be checked for just mortgages are long gone; even some employers are conducting full credit checks nowadays.

"It's never been so crucial that people who think they do have a chequered financial history take positive actions to improve their credit file so they avoid disappointment down the line."

As you can see, it's vital to be on top of your credit score and know the situations where you're likely to be checked. Unfortunately, just 12% of those surveyed know their exact rating, which means many people could be in for a shock when applying for a loan, credit card, mortgage or even a job.

Don't be one of them! Make sure you know your score inside-out by signing up to a credit check provider (such as Experian CreditExpert), and if it's less than perfect, start making the necessary improvements. Read our guide on how to do just that, and hopefully, your score will soon be the picture of trustworthiness.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.