Follow these procedures to assist avoid surprises before you submit to a credit check. Such as for a loan or credit card application, employment screening or flat rental application, for example:
- Examine your credit history and score.
- Request any necessary changes
- Think about credit prequalification.
- If needed, work to improve credit.
- any credit freeze lifted
Almost every time you apply for a loan, credit card, or long-term financing from a retailer. As well as possibly when you look for an apartment to rent, vehicle insurance, or certain jobs. Your credit will be checked. Here’s how to get ready so that your credit check paints the best possible picture of you.
How Do Credit Checks Work?
Depending on who is conducting the credit check, the term “credit check” might indicate several things. The Fair Credit Reporting Act (FCRA), which governs credit checks in the US, gives the following parties permission to check your credit:
- Lenders, who may examine your credit reports. The credit scores obtained from them in order to assess how reliable a borrower you are.
- Automobile insurance companies that can assess certain sector-related credit ratings are available in the majority of states.
- Renters who have access to credit reports and ratings.
- Employers who can study credit reports as part of pre-hiring background checks, unless prohibited by state or local legislation. Federal law mandates pre-employment credit checks in some regulated industries, including banking and securities trading.
In accordance with the FCRA, you must be informed in writing and give consent in writing before a credit check is carried out. (Loan and credit card applications frequently have language allowing credit checks. Other permitted credit checkers frequently have standalone notification and authorization forms.)
Before a credit check, follow these instructions.
No matter what kinds of credit checks you might encounter in the future. Doing the following actions can help you present yourself in the best possible light and raise your chances of success:
1. Verify your credit history and score
It’s a good idea to evaluate your credit reports on a regular basis to look for errors and unusual activities. That could indicate identity theft. In order to give yourself time to address any differences you find, it’s also a good idea to study them before any credit check, ideally a month or two beforehand.
You can also check your credit score, most likely your FICO® Score, which is based on your report. This is a numerical indicator of the risk you pose to lenders; the higher the number, the lower the danger you are deemed to be.
It’s best to study your credit reports from each of the three national credit reporting agencies—Experian, TransUnion, and Equifax—before a credit check because you won’t know which credit report a lender or other authorised party will check. You are always welcome to view your free Experian credit report and score. Moreover, AnnualCreditReport.com offers a free copy of each of your credit reports.
2. Ask for Modifications
You have the opportunity to register a dispute if you find errors in your credit reports in order to have the data corrected or erased. The Experian Dispute Center is the easiest way to handle issues with your Experian credit report even though each credit agency has its own procedures for registering complaints.
Credit report abnormalities are very uncommon and frequently result when a lender or other data provider submits information to a credit agency that was mistakenly logged. Because of this, there is a significant probability that a difference you find on one credit report will also show up on the other two. To resolve the issue as soon as possible, you should register complaints with each of the three agencies in that situation.
If you notice any inconsistencies, such as queries linked to credit applications you didn’t submit or new loans or credit card accounts you don’t recognise, it’s possible that fraudsters are using your information stolen to apply for credit in your name. Use the contact details in the credit report entry to get in touch with the questioned lender and request that they look into the situation.Notify law enforcement if necessary. Also, you have the option to protect your credit reports with security freezes or fraud alerts, which would be prudent in this situation.
3. Keep Credit Prequalification in mind
Prequalification doesn’t guarantee conditions or even that your application will be accepted; these things usually depend on a formal credit check and, frequently, proof of your income. This technique can help you focus on the lenders offering the most reasonable borrowing terms and can give you a decent estimate of the amount of credit you can anticipate.
4. Search for methods to raise your credit score
Take actions to raise your credit score if you’re not satisfied with the outcomes of your credit check or the responses to your prequalification submissions. You could even be able to see real progress in as short as 30 days, unless your credit score is severely hindered by serious mistakes.
But, don’t base all of your credit application expectations on a speedy improvement in your credit score. If you have negative entries like late payments or collection accounts, it may take months or even years to dramatically raise your credit score. Hence, to maintain a low credit use rate, be patient and cultivate excellent credit habits like timely payments and keeping your credit card balances low.
5. Unlock or Unfreeze Your Credit
Before agreeing to a credit check from a new lender, potential landlord, or employer, you should make plans to have any security freezes or credit locks you’ve put in place removed or suspended, whether it’s out of prudence or due to prior instances of credit fraud. You must make a separate thaw request from each credit bureau if you have frozen your credit reports at all three of them.
By connecting into your account or the Experian mobile app, you can rapidly unlock your Experian credit report if you’ve locked it, an option that comes with other credit-security measures with a premium Experian CreditWorksSM Premium membership.
Credit checks are crucial for your personal finances. Your ability to rent a home, and even your future work prospects. It can be frightening to worry what a credit check would reveal about you when the stakes are that high. You can prepare for the results of credit checks and even take action to influence them in your favor. By frequently monitoring your credit and taking the other straightforward procedures mentioned above.