When you apply for a loan, lenders need to review your financial history to make responsible lending decisions. One way they do this is through a credit check.
What Is a Credit Check?
A credit check is a review of your credit history to understand how likely you are to repay a loan. This can include:
Your borrowing and repayment history
Outstanding debts
Public records such as bankruptcies
Your current credit score
In Canada, credit checks are completed through one of the two major credit bureaus, Equifax or TransUnion. These agencies collect and maintain information about your credit activity.
There are two types of credit checks: soft credit checks and hard credit checks.
Soft Credit Check
A soft credit check:
Does not impact your credit score
Is not visible to other lenders
Is often used for pre approvals or when you check your own credit
Soft checks allow you to explore potential loan options without affecting your credit profile. It is a good idea to review your credit report at least once a year to stay informed.
Hard Credit Check
A hard credit check:
May temporarily lower your credit score
Is recorded on your credit report
Is used when you formally apply for credit such as a loan or credit card
A single hard inquiry usually has a small and short term impact. Multiple hard inquiries within a short period of time may have a greater effect.
How Kizzo Uses Credit Checks
Kizzo is powered by Fig Financial and follows a similar responsible lending process.
Soft Credit Check
We first complete a soft credit check when you begin your application.
This helps us review your eligibility and determine whether we can present you with an offer.
There is no impact to your credit score at this stage.
Hard Credit Check
A hard credit check is only completed if your application is approved.
It is not performed if your application is declined.
We will always ask for your consent before completing a hard credit check.
This means you can apply and see if you qualify without affecting your credit score unless you are approved and choose to move forward.
Learn More
To learn more about credit reports and credit scores, you can visit the Government of Canada website for information on debt and borrowing.
Disclaimer: This article is for general information only and does not constitute financial advice. While we aim to keep this information accurate and up to date, it may not apply to every individual situation.
