Quick answer: To prepare for a credit check, review your credit report, pay down debt, avoid new applications, and use prequalification tools to check your eligibility without impacting your score.
Key takeaways:
- A credit check is a formal review of your credit report by a lender to assess your creditworthiness, typically triggered when applying for credit.
- Checking your credit score and report is considered a soft inquiry, won’t hurt your score, and can help you see where your credit health stands.
- Maintaining or improving your credit score with good financial practices before a credit check can help your chances of approval.
If you were to apply for a new line of credit, would your current credit history get you approved? When submitting a loan application, passing a credit check almost always requires preparation on the consumer’s end. You’re never guaranteed approval for a loan. But there are ways to feel more in control of your financial status when submitting your application.
A credit check closely examines your credit history and payment habits. That’s why it’s beneficial to present yourself as being responsible and consistent. Showing you’re a worthy applicant can also give you access to better loan terms, such as a lower interest rate or higher credit limit.
Before a lender checks your credit, consider taking a few steps to improve your odds of getting approved.
Steps to prepare for a credit check
- Check your credit score using a free tool or app
- Review your credit report for accuracy
- Use your credit responsibly. Pay all bills on time and pay off outstanding debt to lower your credit utilization rate. Avoid unnecessary credit applications and limit hard inquiries
- Use preapproval tools to gauge your chances without a hard inquiry
- Dispute any errors
- Compare credit options across multiple lenders
What is a credit check and how does it work?
When you submit an application for a large financial commitment—such as a loan, credit card, or lease—it triggers a hard credit check or hard credit inquiry. A credit inquiry is a formal request, usually made by a financial institution, to view your credit report.
Once you grant a lender permission to check your credit, they pull your credit report from any of the three major credit bureaus: Experian®, Equifax®, or TransUnion®. Each credit reporting agency regularly updates the status of your current accounts to calculate your credit score.
During the credit check, the lender will generally evaluate the following to determine whether you get approved, how much money you can borrow, and the interest rate you’ll qualify for:
- Current credit score
- On-time payments
- Potential borrowing power
Each of these factors is subject to change over time, depending on your financial patterns and income.
Soft inquiry vs. hard inquiry
A soft inquiry does not affect your credit score, while a hard inquiry may lower your credit score slightly. Understanding the difference between soft and hard inquiries can help you manage your credit more effectively:
| Soft Inquiry | Hard Inquiry | |
| Definition | A credit check that doesn’t affect your score | A credit check that may temporarily lower your score |
| When it occurs | Checking your own credit, prequalification tools, background checks | Applying for loans, credit cards, or leases |
| Credit score impact | No impact | May lower your score by a few points for up to 12 months |
| How long it stays on report | Not visible to lenders | Typically stays on your credit report for two years |
How do I prepare for a credit check?
When applying for any type of credit, it’s smart to prepare your finances for a credit inquiry beforehand. The better your score and report, the higher your chance of getting your application approved. This way, you also avoid the risk of hard credit inquiries lowering your credit score and getting denied on top of it.
Maintaining a good or excellent credit score will help you obtain the lowest possible interest rates. Aim to hold a high score to appear as a worthy candidate to lenders and set yourself up for the most suitable loan.
Know what to do before a credit check. It starts with looking into the data unique to you.
Check your credit score
It does not hurt your credit to run a credit check on yourself. Looking at your FICO® score or VantageScore® is considered a soft inquiry. Many websites or apps offer to check your score for free.
A credit scoring model will give valuable insight into your credit rating. It’s important to understand what shaped your current score. This can help you determine how likely you are to qualify for the credit you’re applying for. Your data is combined into five categories to create your credit score:
- Payment history (35%)
- Accounts owed (30%)
- Length of credit history (15%)
- New credit (10%)
- Credit mix (10%)
After looking at your score, consider if it would be beneficial to spend time boosting your score before applying for credit. Results may take a few weeks to update, but making fixes in advance can significantly help improve your score.
Pro Tip: According to Experian, credit score ranges are typically categorized as follows:
- Excellent: 800–850
- Very good: 740-799
- Good: 670–739
- Fair: 580–669
- Poor: 300–579
Try to aim for a higher credit score as you build credit experience, and avoid falling into the poor credit score range. To lenders, the lower your credit score, the higher risk you may represent. If you’re in this position, it may be difficult to obtain an advantageous loan or one at all. Rebuilding your credit and getting the best loan options available for you could be worth the wait.
Does it hurt your credit to run a credit check?
It does not hurt your credit to run a credit check on yourself. Looking at your FICO® score or VantageScore® is considered a soft inquiry. In fact, it’s good to check your score regularly to ensure all current and new information is correct. Many websites or apps offer to check your score and report for free.
Review your credit report
Your credit report calculates your credit score with a soft inquiry. It contains personal information, credit accounts and history, along with public records, including things like collections or bankruptcies. It documents your credit in detail and displays how well you’ve managed your money for up to 10 years.
Take note of important habits that have weighed your score over time and how you should take action. Affecting factors often include how many late payments you might have had and how efficiently you’ve paid your bills overall.
Use your credit responsibly
Credit grows over time depending on how you handle your borrowed money. A poor or damaged credit score can hold you back from getting a loan entirely. But using your existing credit responsibly can help build your credit, no matter what score you’re starting at.
When applying for a new line of credit, it’s crucial to make sure you’re taking these influential measures seriously:
- Pay all bills on time. Payment plays a huge role in determining your credit score. Setting up automatic payments can ensure you never miss a due date.
- Pay off debt. Paying off outstanding debts can help improve your payment history and reduce your credit utilization ratio.
- Stay below credit limits. Always aim to keep your credit utilization rate significantly lower than the amount you have available.
- Only apply for the credit you need. Every time you apply for new credit, your score could drop five points or more. New credit can lower your average account age. Applying for multiple loans around the same timeframe can also raise a red flag to lenders about your financial situation.
Utilize preapproval tools
Before you submit an application and trigger a hard inquiry, use a preapproval or prequalification tool. This can give you a better idea of your chances of approval, and it only requires a soft pull. A soft inquiry is performed to find out if you’re eligible for a certain credit card or loan. Most lenders, banks, or similar financial companies offer these tools on their websites.
Pro Tip: Checking your rate through Upstart is always a soft inquiry on your credit and won’t impact your score.* Our model looks beyond your credit score when matching you with loan options.
Dispute Any Errors
You can dispute any mistakes in your credit report. The bureau displaying that information will verify whether it is correct, then remove it from your report accordingly.
Misinformation on your credit report is a common reason why your credit score may have dropped. Having negative information removed from your report might cause your score to increase. Ensuring you have an error-free credit report is a good way to prepare before a potential lender runs a check.
Compare your credit options
Comparing your options across more than one lender can save you time and money no matter what type of credit you’re considering.
Whether it’s a revolving line of credit or an installment credit, check the fees, interest rates, and rewards you could earn to find the best option for you. This way, you won’t struggle to build your credit and your financial status will remain in good standing.
How Long Before a Credit Check Should You Prepare?
Ideally, you should start preparing 30 to 60 days before a credit check. This window gives you enough time to make meaningful improvements without rushing or triggering unnecessary credit activity.
Some factors like payment history and recent balance, can update relatively quickly. For example, paying down credit card balances or bringing past-due accounts current may improve your credit profile within a billing cycle. These are among the most effective short-term actions you can take.
Other elements, such as the length of your credit history or the number of recent hard inquiries, take longer to influence. If you’ve recently applied for multiple lines of credit, allowing time for those inquiries to age can help stabilize your profile before another lender reviews it.
Take hold of your finances before a credit check to build your future
Understanding what to do before a credit check with these steps can ensure you’re in the best position when applying for credit. Before you submit an application, take a look at your own credit report, use your existing credit responsibly, consider pre-qualification tools, and don’t forget to compare your options.
Whichever way you prepare for a credit inquiry, even a slight increase in your credit score can determine if you’ll get approved for the loan you’re aiming for.
Frequently asked questions
Does checking your own credit hurt your score?
No. Checking your own credit is considered a soft inquiry and has no impact on your credit score.
How long does a hard inquiry affect your credit?
Hard inquiries typically stay on your credit report for two years, but they may only affect your score for up to 12 months, with the most significant impact within the first few months.
What credit score do I need to get approved for a loan?
Requirements vary by lender, but a score of 670 or higher is generally considered good and improves your chances of approval with favorable terms.
Can you pass a credit check with bad credit?
Yes, it’s possible, but approval may be more limited. Lenders may offer smaller loan amounts or higher interest rates, depending on your overall financial profile. Some lenders also consider factors beyond your credit score.
What do lenders look for in a credit check?
Lenders typically review your credit score, payment history, current debt levels, credit utilization, and recent credit activity. These factors help them assess your ability to repay a loan.
Won't affect your credit score¹