Consumers left in the dark over credit checks

26 May, 2016

Thousands of people in the UK are in the dark about when they’ll be credit checked for life events and financial products, according to a study from Amigo.

The research revealed being credit checked for a job (80 per cent), monthly insurance instalments (63 per cent) and renting a flat are among the top things consumers are not aware they’ll be credit checked for.

More seriously, 18 per cent didn’t know they would be credit checked when applying for a credit card, meaning they’re potentially hindering their chances of getting one. This was closely followed by submitting a mortgage application and a securing a personal loan. 

The life events and financial products Brits were unaware they’d be credit checked for

 Job – 80%

Monthly insurance instalments – 63%

Electricity and Gas direct debit payment – 56%

Flat rental – 50%

Mobile phone monthly contract – 37%

Overdraft extension – 49%

Store cards – 42%

Retail finance – 37%

Car finance – 27%

Personal loan – 24%

Mortgage application – 22%

Credit card – 19%

With only 12% of people actually knowing their exact rating, thousands could be in for a nasty shock when applying for a job, loan, mortgage or even renting a flat.

What’s worse, if you are credit checked and are declined, that process can actually damage your credit score even further.

A damaged credit score severely impacts an individual’s ability to borrow from a lender, especially a mortgage and a loan. If your credit score is poor, it indicates that you are less trustworthy when it comes to paying back a loan.

There are a number of credit reference agencies available which allow people to check their score before applying for credit including Equifax, Experian and Callcredit.

Glen Crawford, CEO at Amigo Loans, which commissioned the study said: “There is a huge lack of understanding about when you’ll be credit checked and for which products. The days when you would be checked for just mortgage 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.”