Credit Building > Does Monzo run a credit check?

Does Monzo run a credit check?

Wollit Team3 minute read · Updated 29th June 2024

Yes, Monzo does run credit checks, but the type of credit check varies depending on the specific product you are applying for.

Monzo offers four products for individuals: a current account, an overdraft facility, a credit card, and a personal loan. Each requires a soft or hard check, sometimes both.

Let’s look at them one by one.

What kind of check does Monzo do for its current account?

When you sign up for a Monzo current account, Monzo only runs a soft credit check (also known as a “quotation search”). This type of search does not impact your credit score, and it’s not visible to anyone but you.

Monzo uses this soft check to see if they can offer you an optional overdraft in the future if you want one.

Once your Monzo account is open, Monzo also notifies credit reference agencies that you have a bank account with them. However, opening a bank account alone does not affect your credit score unless you get an overdraft or open many accounts quickly.

What kind of check does Monzo run for an overdraft?

When you apply for an overdraft with Monzo, they will run a hard credit check.

This differs from the soft credit check Monzo ran when you signed up for a current account. That check was used to see if you’d be eligible for an overdraft. However, actually applying for the overdraft triggers a hard credit check.

A hard credit check is reported to credit reference agencies, is visible on your credit file for up to two years, and can impact your credit score, especially in the short term.

What kind of check does Monzo run for its Flex Credit Card?

The Monzo Flex Credit Card is a credit card alternative offered by Monzo. It comes with a virtual Mastercard that allows you to spread the cost of your purchase over 3 interest-free instalments or over up to 24 instalments at an APR of 29%.

To see if you qualify for Monzo Flex, Monzo initially only runs a soft credit check. This soft check allows Monzo to provide a personalised offer without leaving a mark on your credit file.

However, if you decide to go ahead with your application and get the Flex Credit Card, Monzo will conduct a hard credit check.

This hard search is standard practice for most lenders when you take out a new kind of credit, and it may have a small negative impact on your credit file, usually only for a few months.

How about Monzo Loans?

Monzo offers two kinds of personal loans:

Loans up to £10,000. These have an APR of 25.4%.
And loans between £10,000 and £25,000. The APR here is 14.8%.

The process of applying for a Monzo Loan is very similar to that of applying for a Monzo Flex credit card.

Monzo will first run a soft credit check to determine eligibility without affecting your credit file. However, if you decide to take out the loan, a hard credit check is conducted, which is reported to credit reference agencies. The company also notifies credit reference agencies that you have a loan with them. Still, this alone should not affect your credit score.

Does opening a Monzo account affect my credit score?

Opening a new Monzo current account should not affect your credit score. When you sign up for a Monzo account, Monzo runs a soft credit check, which does not impact your credit score. Again, this is only to see if you’re eligible for an overdraft later.

However, when you apply for a Monzo Loan, overdraft, or Flex credit card, Monzo will first run a soft check to see if you’re actually eligible and if your credit score is good enough. They’ll next run a hard credit check if you’re eligible and decide to take out the loan. This hard credit check can have a small, temporary negative impact on your credit score.

The good news is that a Monzo credit product (especially Monzo Flex) can help you improve your credit score if you make payments on time and in full.

This doesn’t necessarily mean Monzo Flex or the other Monzo products are great credit-building tools. They come with high APR, low credit limits, and no rewards or cashback. They might also need you to already have a good credit score.

For a specialised credit-building tool, consider downloading an app like Wollit. Unlike a Monzo Loan or Flex Card, Wollit guarantees approval if you choose to sign up. Using Wollit instead also keeps you safe from maxed-out limits and unexpected interest charges or fees by reporting a monthly, fixed-fee subscription as loan repayment. This helps you build your credit history and score without the risks of a high APR loan or card.