Anytime a consumer applies for a loan from a financier, lending agency or loan office the application will include an authorization to check the consumer’s credit file. The consumer credit file is a report compiled by a credit reporting agency and including all loans or credit account for a period of several years of the [...]
About Credit Check Australia
In this day and age, any sort of new financial endeavour or extended financial relationship with any company in Australia will warrant that company looking into your personal credit history. Before the business will be conducted a credit check will be performed, and the results of the check will have a great effect on the intended financial transaction. In many cases, a credit check can immediately halt all proceedings and delay your plans for months or even years.
On the other hand, if your business will be providing a product or service that requires the initiation of an extended financial relationship with a customer, you are taking a very big risk by not performing a credit check on the customer. Even if a credit check is being conducted, if it only touches on the basics, the risk for the business is far from eliminated.
Detailed Credit Check
A detailed credit check that digs deep into every aspect of an individual’s credit history is the only way to make sure the risk of your business is as low as it can possible be. If you are an individual, running your own detailed credit check can help in two important ways. First, it allows you to prepare for expected future transactions. Major loans should not be taken out with a bad credit report. Being declined can make your credit report worse than it already is. Frequently checking your credit report can also help prevent the growing problem of identity theft by allowing you to see if someone is checking your credit without your authorisation.
Credit Rating
Most Australians realise agencies exist that possess details of personal financial transactions. However, what many people do not understand is what information is compiled and how it is used by the credit reporting agency. Not only do credit reporting agencies keep a history of financial transaction details, but they analyse the details by putting them through a complicated and secret formula that generates a number that represents your personal credit rating. Some of the major factors that affect an individual’s credit rating include the following:
- Utility bills – Utility companies such as the phone company, television service company, and electric company report to the credit reporting agencies how you pay your monthly bills. If you are ever late paying a bill, the utility company will report it to the credit agency, and they will continue to report it each 30 days it is late, so your history will show payments that are late by over 30 days, 60 days, 90 days, and more. Even after the bill is paid, the fact that it was paid late stays on the credit report for 5 to 7 years.
- Credit cards – Credit cards make up a large portion of a credit report. Paying off the balance on credit cards each month gives you a higher credit rating. Keeping a high balance lowers the credit rating because it is a sign that you might have too much debt. In addition, not having a credit card at all also makes for a low credit rating because the agency has no history that it can use to evaluate how well you handle credit and debt.
- Loans – Automobile loans, home loans, and personal loans all show up on a credit report. Like utility bills, on-time payments are crucial to a favourable credit rating. In addition the balance of all debt as a ratio to your income has a substantial impact on your credit rating.
Establishing Credit
Building a good credit rating is very important to life in modern Australia. As soon as a person is out of school and has a stable income, they should begin building a credit history. This is best done with a low-limit credit card. Department store credit cards are easy to get approval for and are a good way to start.