Do lenders need your permission for a credit search?

Yes, in practice. A lender will always ask for your agreement to continue before completing a hard credit check, and lenders must check your creditworthiness and satisfy themselves that you can afford the repayments before lending you money¹. That is the rule that matters to most people: you are asked, and you can say no.

The permission you give is not the same as consent in the strict legal sense. Data protection law does not actually require organisations to have gained your consent before they can carry out a search of your credit file, as long as they have a lawful basis for doing so and you have been told that this search is going to take place³. What you are usually agreeing to is the search itself, and the terms that come with it.

What follows from that is a practical distinction. A hard search leaves a footprint other lenders can see for at least 12 months and can affect your credit report and score⁴. A soft search does not affect your score and cannot be seen by lenders at all⁵. Most of the checks people worry about, including eligibility checks and tenant referencing, are soft.

Lenders must get your agreement before a credit check

The starting point is that a lender cannot decide whether to lend to you without looking at your credit history. Both secured and unsecured lenders will look at your credit history to decide if they should lend the money to you¹¹. All lenders must check your credit worthiness and satisfy themselves that you can afford the repayments before lending you money². Payday lenders must check your credit worthiness before they give you a loan, roll over a loan or increase the amount of credit¹².

How that check is framed varies by lender. TSB states plainly that customers must give consent to lenders before a check is made¹. HSBC's guidance is that a lender will always ask for your agreement to continue before completing a hard credit check¹³. The Financial Ombudsman Service notes that there isn't a specific set of checks that lenders have to carry out, so the depth of the check is a commercial decision rather than a prescribed one¹⁴.

There is no such thing as a loan without one. As one lender's guidance puts it, you can't get a loan without a credit check, and it is a legal requirement¹⁵. Same day lenders will still have to check your credit file, and there is no such thing as a "no credit check" loan¹⁶.

A small number of products sit outside this. Credit union current accounts usually do not require a credit check, even if you apply for an overdraft, because credit unions normally use manual checks to decide whether to lend¹⁷. Basic bank accounts use a soft search of your credit file for identity checking only, which does not affect your credit score, and you need to give permission for it¹⁸.

Soft or hard search: what the lender can see and what it leaves

The difference between the two is the whole answer to most questions about credit searches, and it is worth being precise about it.

A hard search involves a full search of your credit report and leaves a footprint on your credit file that is visible to other lenders for at least 12 months, and it can impact your credit report and score⁴. This is what happens when you complete a full application for a loan, credit card, mortgage or current account.

A soft search is different in three ways. It does not have an impact on your credit score, and only you will be able to see that any lender has performed one⁵. Some lenders offer soft searches that are not recorded by credit reference agencies at all and will not impact your credit score¹⁹. And soft checks are not visible to lenders, so they will not impact future credit applications²⁰.

Mortgage agreements in principle are a good example of where the line falls. If you are applying for a mortgage in principle, lenders may be able to conduct a soft check, which does not show up on your record²¹. First direct describes the same thing from the lender's side: soft checks won't impact your credit rating, but a hard search can, so be sure to check²².

Does checking your eligibility count as a credit search?

It counts as a soft search, and that is the point of it. An eligibility check lets you see whether a lender is likely to accept you before you commit to a full application, and the search behind it stays private.

The pattern is consistent across lenders. Experian explains that pre-approved loan offers are based on a soft credit check and, although this is recorded on your credit report, it can't be seen by lenders⁶. Ulster Bank's overdraft eligibility tool tells customers the same: you'll see this search on your credit file, but lenders won't²³. 118 118 Money sets out both halves of the process: an eligibility check does not affect your credit score, but should you decide to complete a full application, the lender will conduct a credit search that will be visible to other lenders²⁴.

Some lenders go further and combine the check with other information. GMB Credit Union's member loan is subject to a credit search and Open Banking²⁵. That is a reminder that a soft search is not the only thing a lender may look at.

The practical consequence is that using an eligibility checker before applying does not damage your chances. A full application does leave a mark, so the sequence matters: check first, apply once.

Landlords and letting agents also need you to agree

Tenant referencing follows the same consent rule as lending, with an extra restriction on what can be searched. Landlords and letting agents need your permission to check your credit history when you apply to rent²⁶. They can only do a credit check if you agree⁷, and landlords and agents can only run a credit check with your permission⁸.

In Scotland the requirement is put more formally: they can only check your credit rating if you give them written permission²⁷.

What they can see is limited. Landlords and agents can only do a soft search of your credit record⁷, and this means they only see information that is already public, for example if you have CCJs, an IVA or bankruptcy⁸. A credit check does not affect your credit score⁸, and the credit check does not tell landlords if you have missed rent payments, though some landlords might check on landlord websites⁸.

Two further protections are worth knowing. Private landlords and letting agents cannot charge you for credit checks or other reference checks⁷, and they need your permission and you cannot be charged for it²⁸. Smaller private landlords and letting agents do not need your consent to check public records²⁹.

Landlords are not only checking your credit. They must check you are a reliable tenant and can afford the rent, and they must also check your immigration status before they rent to you⁸. Most landlords and letting agents will check to see what they think you can afford by looking at your income and credit score⁷. If you cannot pass a credit check you might be asked for a guarantor³⁰.

How lenders tell you how your credit data is used

You are entitled to know which agency was consulted and, if you are turned down, why. Credit scoring rules require disclosure even though the score itself stays hidden: lenders won't tell you what your score is, but if you ask them, they must tell you which credit reference agency they used to get the information about you⁹.

Where an application is refused, the duty is stronger. If a lender refuses you credit after checking your credit reference file, it must tell you why credit has been refused and give you the details of the credit reference agency it used⁹. The Consumer Credit Act 1974, Section 157 puts this in law: where a creditor decides not to proceed with a prospective regulated agreement on the basis of information from a credit reference agency, it must inform the debtor that the decision was reached on that basis and provide the particulars of the agency, including its name, address and telephone number³¹.

The standard document behind all of this is the Credit Reference Agency Information Notice, usually shortened to CRAIN. It describes how the three main UK credit reference agencies use and share personal data, and the version adopted by Callcredit, Equifax and Experian was published on 23 October 2017³². Lenders and other organisations that search your file are expected to point you to it.

Two further points about how your data is handled. Each of the credit reference agencies provides lenders with the facilities to make their own changes to the information you see on your credit file³. And if you hold a joint account or are otherwise financially linked, the lender can have full access to your credit file in the same way it could if it were you applying for credit³.

If a check was made without your agreement

A search you did not agree to is worth challenging, and there are several routes.

Start with the lender. Ask which credit reference agency it used and on what basis the search was made. If the search followed a refusal, the lender should already have told you why credit was refused and given you the agency's details⁹. If it did not, that is a separate failing.

The legal position is that failure to obtain your consent is a breach of the Data Protection Act 2018¹⁰. You can raise this with the lender directly, and if you are not satisfied, take it to the Information Commissioner's Office, which oversees how credit data is used³. The Financial Ombudsman Service can look at complaints about lending decisions and the way a lender has treated you¹⁴.

There is also a specific protection against credit being pushed at you. It is an offence to give a person a credit-token if he has not asked for it³³. To comply, a request must be contained in a document signed by the person making the request, unless the credit-token agreement is a small debtor-creditor-supplier agreement³⁴.

If the problem is not a search but a firm taking money without agreement, that is a different complaint. Creditors are not permitted to take payments without your permission³⁵.

What is a CRAIN notice?

CRAIN is the Credit Reference Agency Information Notice, the document that explains how the credit reference agencies use and share your personal data. The version adopted by the three main UK agencies, Callcredit, Equifax and Experian, was published on 23 October 2017³². It is not something you apply for or receive individually; it is the notice lenders and other organisations point you to when they search your file.

It is worth separating CRAIN from a notice of correction, which is a different thing with a similar-sounding name. A notice of correction is a note you can ask a credit reference agency to add to your own file. Credit reference agencies won't remove adverse information if it is correct, although consumers may ask to submit a notice of correction to explain the circumstances³⁶. You can ask the agency to add one if exceptional circumstances, like redundancy, led to your debt³⁷, and it can run to up to 200 words explaining why you got into debt¹⁰.

So the two work in opposite directions. CRAIN tells you how your data is used by the agencies and the lenders that search it. A notice of correction tells lenders something about you, in your own words, that the raw data does not show.

Where the permission rule stops

The consent rule is real but it is not absolute, and it is worth being clear about the edges.

The first limit is that consent is not the legal basis for a search. Data protection law does not actually require organisations to have gained your consent before they can carry out a search of your credit file, as long as they have a lawful basis for doing so and you have been told that this search is going to take place³. In practice lenders ask, but the protection you have is as much about being told and being able to challenge as it is about agreeing.

The second limit is public records. Smaller private landlords and letting agents do not need your consent to check public records²⁹, and a tenant soft search shows only information that is already public, such as CCJs, an IVA or bankruptcy⁸. Public register information is, by its nature, available to those who look for it.

The third limit is that a soft search is not a guarantee of acceptance. It tells you and the lender whether you are likely to be accepted, but a full application still involves a hard search that other lenders can see for at least 12 months⁴. Checking eligibility protects your score; it does not commit the lender to anything.

If you are worried about a search that has already happened, or about a refusal, free and impartial help is available. Citizens Advice can explain how lenders decide whether to give you credit⁹, and the Financial Ombudsman Service can take a complaint about a lending decision or the way a lender has treated you¹⁴.