4 Reasons You'll Need A Credit Search

Why would you need a credit search?

1- Job Interviews

Although you may not expect it, credit checks are increasingly part of a job interview process. After the initial interview, if the supervisor likes you and wants to further consider you for employment, they will likely ask for your permission for a credit check before you move onto their smaller pool of potential employees.

You may be asked to sign the credit release form in a stack with several other forms, so you are not always aware of what you are signing. There are several reasons that potential employers want your credit score and credit history.

First, your credit history gives them an idea of what kind of an employee you will be. If you are responsible with credit, you will likely be responsible with your employer’s resources. It also alerts an employee to potential problems with theft or fraud. When an employee is in serious financial difficulties, there is more of a chance that they will defraud their employer to eliminate some of those difficulties.

2 - Pre Approval for a Loan

If you are shopping around for a loan, such as a car loan or mortgage loan, each time you apply to a financial institution you will have a credit inquiry on your credit report.

No institution will give approval for a loan without checking your credit history, so you will be unable to get approval without a credit check. Each inquiry counts slightly against you in your credit score, however, since according to the algorithms, if you are seeking more credit, you must either be in trouble or be willing to incur lots more debt.

In order to avoid negative effects from these multiple credit inquiries, you should do all your shopping around within a short time period. Two weeks is the preferred time span; all credit reporting agencies consider multiple inquiries for a similar type of loan within two weeks to be an indication of loan shopping, and will not count the multiple inquiries against you.

3 - Checking Your Credit

Another time you will want to do a credit search is when you are trying to check your credit report to see if there are any incorrect or negative entries on your report.

You can do this for free once a year at annualcreditreport.com. It’s a great idea to find out what your report looks like before you need a loan, and to clear up any problems you may have before the situation is more challenging.

4 – A Loan Application

The most obvious time that you will need a credit search is when you apply for any new loan.

This includes a home equity loan, a new credit card, a credit increase on a revolving account, a car loan, or a home mortgage.

In order to keep your credit score high, only apply for one new loan at a time, and keep the ratio of available credit high compared to the amount of debt you have.

View all 3 of your FREE Credit Scores

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