There will be a hard credit as part of any credit card application. This check helps lenders decide whether or not to approve your credit application.
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Key takeaways
- Credit card companies in Australia conduct a credit check as part of the credit application process. This typically takes the form of a hard credit check.
- Hard credit checks may have a small impact on your credit score, but they are usually minimal and easily recovered.
- To minimise the impact of a hard credit check on your credit score, space out credit applications, avoid applying for credit you don't need, and ensure your credit report is accurate and up to date.
What is a hard credit check?
A hard credit check, also known as a hard enquiry, occurs when a lender or creditor considers extending credit to a consumer. This type of check will leave a footprint on your credit report (where it will remain for five years). If you have too many of these enquiries within a short time frame, it could impact your credit score.
A hard credit check differs from a soft credit check, where a lender or creditor accesses an overview of your credit report – with limited detail – for pre-approval purposes or to check your credit score. Soft credit checks don't leave a footprint on your credit report, so there's no impact on your credit score.
Do credit card providers do a hard credit check in Australia?
In Australia, when you apply for a credit card, the credit card provider will do a credit check to determine your creditworthiness. This is a hard enquiry, so it will affect your credit score slightly.
How hard credit checks impact credit scores
Hard credit checks could have a small impact on your credit score, but the effect is easily recovered as long as there aren't too many of them within a short period of time.
The best way to minimise the impact of a hard credit check on your credit score is to space out credit applications, avoid applying for credit you don't need, and ensure your credit report is accurate and up to date.
Multiple hard credit checks over a short period will have a greater impact on your credit score, as it may indicate to lenders that you could be in financial distress. For this reason, it is best to limit the number of hard credit checks. Apply for credit only when you really need it.
It's always a good idea to check your credit report regularly to monitor any hard credit enquiries and to make sure that the information is accurate and up to date. Scammers are known to open credit accounts using stolen personal information. If you think that hard checks have been fraudulently made against your account, you can check by getting a free copy of your credit report once every three months.
