What is a credit check?

• A credit check in Australia is when a lender or provider reviews your credit report to assess your financial reliability.
• Credit checks can be either soft or hard, and only hard credit checks may impact your credit score.
• Banks, non-bank lenders, energy providers, landlords, and telcos may all request credit checks. You can check your own credit rating for free through Equifax and Experian.
• Cash Converters performs a credit check when you apply for a continuing credit contract but not for pawnbroking loans. 

A credit check is when a  credit provider accesses your credit report to assess your credit history.

In Australia, your credit report is held by credit reporting bodies such as Equifax and Experian. These agencies collect and store information about your credit history.

When a credit provider runs a credit check in Australia, they’re reviewing information such as:

• Your current and past loans and credit cards
• Repayment history (including missed payments)
• The number of credit applications you’ve made
• Defaults or serious credit infringements
• Public records like bankruptcies or court judgments
• Lenders use this information to decide whether to approve your application and what terms to offer.

Read more about what credit reports are.

There are two main types of credit checks in Australia: soft credit checks and hard credit checks.

A hard credit check can affect your credit score.

Hard credit checks usually happen when you formally apply for:

• A personal loan
• A credit card
• A car loan or car leasing
• A mortgage
• Some Buy Now, Pay Later accounts

A soft credit check does not affect your credit score.

Examples include:

• Checking your own credit rating
• Pre-approval checks
• Identity verification checks
• Some background checks

The key difference between soft and hard credit checks is simple:

• Soft checks have no impact on your score
• Hard checks may impact your score.

Too many hard credit checks in a short period can lower your credit score because it may suggest financial stress.

A credit check isn’t just a score, it’s a summary of your borrowing history and how you’ve managed credit over time.

In Australia, a credit rating check can include:

• Your personal details – such as your name, date of birth and address history
• Credit accounts you’ve opened – both current and closed
• Repayment history information
• Credit enquiries – made by other lenders 
• Defaults – generally payments that are 60 days overdue and at least $150
• Court judgments or insolvency information

All of this helps lenders understand how you’ve handled credit in the past.

Under Australia’s Comprehensive Credit Reporting system, many lenders share both positive and negative repayment information with credit reporting bodies. This means paying on time can help build your credit score over time, not just protect it from damage.

However, not all lenders report the same level of detail.

Under the Government’s Mandatory Comprehensive Credit Reporting regime, the large, authorised deposit-taking intuitions such as major banks are required to share comprehensive credit data with credit reporting bodies.

Smaller lenders and some credit providers may only report negative events, such as defaults or serious arrears. That means your credit file can vary depending on who you borrow from.

If you’re ever unsure what’s being recorded, you’re entitled to request a free copy of your credit report from Equifax or Experian.
Reviewing it can give you clarity and help you understand how lenders may see your application.

Many organisations can request credit checks in Australia, not just banks.

1. Financial institutions and lenders

Banks, credit unions, and non-bank lenders must conduct responsible lending checks under the National Consumer Credit Protection Act 2009.

This includes:

•    loan providers
•    Credit card issuers
•    Car finance and leasing companies
•    Mortgage lenders
•    Some Buy Now, Pay Later providers

They use credit checks to assess risk and comply with responsible lending obligations.

2. Telcos and utility providers

If you’re wondering whether your Telco does credit checks or if energy companies do credit checks, the answer is often yes.

Telecommunications companies and energy providers may run a credit check before approving phone plans, internet contracts, and electricity or gas accounts.
 

Do credit checks affect your credit score? The short answer is yes – but usually only slightly.

There are two types of credit checks in Australia:

• Soft credit checks – such as when you check your own credit report. These don’t affect your score.
• Hard credit checks – when you formally apply for credit. These can have a small, temporary impact.

One or two hard enquiries are generally normal and unlikely to cause significant concern. A single enquiry may cause a small dip in your score, but it typically stabilises within a few months if the account is managed well.

Where it can become an issue is when multiple applications are made within a short period – usually within three to six months. Several hard enquiries in that timeframe may signal financial stress to lenders and can reduce your credit score.

Credit checks themselves aren’t inherently bad. They’re a standard part of applying for credit. The impact tends to come from repeated applications in a short window or from missed repayments after approval.

Can you check your own credit score?

Yes – and you should.

Under Australian law, you’re entitled to a free credit report every three months from:

• Equifax
• Experian

The safest way is to request it directly from one of these credit reporting bodies.

Checking your own credit rating is free and does not harm your credit score.

For a step-by-step guide, see our article on how to get your credit score for free.

Are credit checks free?

Credit checks conducted by lenders are not something you pay for.

You can access your own credit report for free and are entitled to free copies from each credit reporting body every three months.

Why do lenders need to do a credit check?

Lenders conduct credit checks to:

•    Assess your ability to repay
•    Meet responsible lending laws
•    Reduce risk
•    Set appropriate loan limits and pricing

Under Australian responsible lending obligations, lenders must take reasonable steps to verify your financial situation. Depending on the type of consumer loan product, a credit check may be is one of those steps.

Both banks and non-traditional lenders rely on credit checks as part of a broader assessment, which may also include:

• Income verification
• Bank statement reviews
• Employment checks

Not all loans in Australia are assessed the same way. Whether a credit check is required depends on the legislation the product falls under and a credit provider’s policies.

Also note that some credit providers might not be obligated under the law to undertake a credit check but still choose to do one as part of their risk assessment.

Requirements can vary between credit providers, so it’s always a good idea to ask the lender directly whether a credit check will form part of their assessment process.

Loans that usually include a credit check

Most consumer loans are regulated under the National Consumer Credit Protection Act 2009 (NCCP Act). Under these rules, lenders must follow ASIC’s responsible lending obligations, which normally include among other things, reviewing your credit report and bank statements.

These regulated products may include a credit check:

• Personal loans 
• Car loans for personal use
• Revolving line of credit loans
• Home loans and mortgages
• Credit cards
• Small Amount Credit Contracts (SACCs)
• Buy Now, Pay Later accounts regulated under the NCCP Act (from 10 June 2025)

Loans that may not require a credit check

Some products sit outside the NCCP Act or are specifically exempt. Because they’re assessed under different rules, lenders may not need to check your credit history.

These commonly include:

• Pawn loans: regulated by state/territory pawnbroking laws rather than the NCCP Act. The loan is secured by your item, so a credit check isn’t required.
• Business or commercial loans: exempt when the credit is used predominantly for business purposes.
• Certain short term, low cost loans: some products under 62 days with capped fees may be exempt from the National Credit Code.
• Wage or pay advances: often structured to fall under exemption categories rather than consumer credit laws.

ASIC explains when the credit legislation applies (and when it doesn’t) in their guidance for credit licensees, and community legal sites like the South Australian Law Handbook provide plain English breakdowns of state based pawnbroking rules.

Our Cashies Loan, a continuing credit contract, is regulated under the NCCP Act, so we conduct a credit check as part of our responsible lending assessment.

Our pawnbroking loan is regulated under state laws and secured by your item, so a credit check isn’t needed.

Understanding how credit checks work puts you in control of your credit profile and helps you apply with confidence when you’re ready.