A credit check is a method by which a company can review your recent financial behavior to render an informed decision about whether or not to lend to you. The information contained within your credit report will also likely determine the interest rate you are charged by the lender.
The Facts
A potential creditor or employer must have your permission before performing a credit check on you. Government agencies, however, such as the FBI, can review your credit report in the interest of national security without your permission.
Time Frame
Evidence of a credit check will appear on each of your credit reports for a period of time no longer than two years, although credit inquiries are commonly dropped off before the standard two-year time limit.
Types
A "hard pull" is a credit check conducted by an employer or creditor and will have a slight negative impact on your credit score. A "soft pull" is a credit check that you perform yourself or when your credit score is reviewed by a company for marketing purposes. Soft pulls have no impact on credit scores.
Considerations
Unless you contact the credit bureaus and prohibit the practice, your credit score will be sold to credit card companies which will include you in their credit card marketing programs. Because the personal information these companies have access to is limited, the practice is perfectly legal.
Warning
Numerous hard pull credit checks over a short period of time reflect badly on your financial situation by making you appear to be searching for new debt. Lenders will consider individuals with multiple recent credit inquiries to be a higher lending risk.
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