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What Is A Credit Check and How Does It Work?


A credit check is a fundamental and very important part of the loans process. Whether you are applying for secured or unsecured loans and whether the loan you apply for is short or longer term in its length, you will have to undergo a credit check. The credit check process carried out by all lenders in the US is an important aspect of their risk assessment process. For example, if you have in the past demonstrated good credit and financial practices and behavior, then you are more likely to have a good credit score, which will be apparent when a lender carries out a credit check. Lenders may also carry out credit checks on other involved parties such as loan guarantors, should they be a part of the loan arrangement.

If you are looking for a short term loan in order to cover an unexpected expense such as a car repair or a medical bill then a payday loan could be the right option for you and your circumstances. If you know you will be able to repay the loan at your next payday or within the set time period, detailed by the lender in the course of your agreement with them, then getting a payday loan or installment loan may help tide you over and relieve some financial pressure from your shoulders.

Kallyss offers loans with credit checks that do not affect your credit score and should not affect your ability to get a loan or credit in the future.

However, if you are going to apply for a short term or payday loan then it is highly likely that you will be subject to a credit check by your lender. This credit check tells the lender everything about your financial history and allows them to make a decision on what sort of loan they should offer you.

In this guide, Kallyss goes through what exactly a credit check is, how it affects you and your credit score and what it could mean for your ability to get a short-term or payday loan with Kallyss.

What is a Credit Check?

A credit check is something that a payday lender, bank or other type of loans provider will likely perform when you apply for a loan with then. This will happen regardless of what type of loan you apply for but is more important for unsecured short term loans.

A credit check grants the lender the information they need to establish a picture of your past financial experience and practices. This includes all of the past loans that you have applied for, any missed payments that may have occurred and the bank accounts that you currently have open.

This allows the lender to assess the risk of giving you a loan; a bad credit check might mean that the lender offers you a loan with a much higher interest rate because there is more risk associated with providing a loan to someone with bad credit.

How Do Credit Checks work?

Credit checks run through the three major bureaus, Equifax, Experian and TransUnion. These contain and collect reports on millions of borrowers which are updated monthly with any missed repayments or new loans that have been taken out.

When the lender makes a credit inquiry and performs a credit check they receive all of this information from the bureau; they will then review this information and make a decision on what sort of loan to offer you. By carrying out the necessary credit checks, lenders are more likely to realize whether or not you are a suitable lending prospect or not.

There are two different types of credit checks, soft credit checks and hard credit checks. The difference is that a hard credit check will leave a credit footprint on your credit record and may therefore affect your credit rating (even in a small way), leaving a record of the credit search having been made by a lender, unlike soft credit checks which will almost always not affect your credit score at all, leaving no trace of a credit search by a lender.

What is a Hard Credit Check?

A hard credit check is a true credit check on your file, this will most likely stay on your record for up to 12 months after it happens. This type of search happens in most high-street banks and with more mainstream loans such as for credit cards, long-term loans and mortgages. If you are applying for many loans at once then these checks will harm your ability to actually get these loans as you are seen as a financial risk because of the amount of loans that you have applied for.

In this respect, it doesn’t matter if you simply need to $1,000 loan in total but try to get the money you need in the form of a $400 loan and a $600 loan from two different lenders. By doing this, if the lenders carry out hard credit checks, there will be a record on your credit record of multiple searches, indicating numerous applications; something lenders see as an increased risk (as they assume the first lender refused your application, leading you to apply with another.)

Although things such as missed repayments and multiple debts outstanding will harm your ability to get a loan much more than hard credit checks on your file.

What is a Soft Credit Check?

However there are also soft credit check, which is what an application with Kallyss provides. These involve the lender looking at your credit file and assessing your eligibility but not actually leaving a credit footprint on your account.  A soft credit check happens also when you check your own score which you can do at anytime.

They do not impact your long-term credit record and instead is a quick check. These are more common with short-term loans such as payday loans like Kallyss provides. Lenders want to make sure that you are free from any missed repayments in your financial history and this is what a soft credit search can do without impacting your credit score.

How Can I Improve My Credit Score?

If you want your credit check to show a better credit score then there are a few ways that you can improve your credit score allowing lenders to take a more lenient view of your ability to receive a loan, short or long-term.

To improve your credit score, you need to show that you can make payments for things on time, such as your cell phone, credit cards and other loans. Here are some of the top tips to improve your credit score to open you up to more options for loans from lenders:

  • Join the electoral register – This is simple and if you have not already done so it is a great way to improve your credit score quickly and easily
  • Close down any unused credit cards – Unused credit cards can show unnecessary spending and financial irresponsibility so shut them down
  • Avoid applying for too many loans in too short a space of time – Applying for too many loans at once makes you look irresponsible and looks like you are applying for loans in order to pay off old loans