What is a Free Credit Check and How Does it Work?

By Angela Monroe - April 13, 2018

When you apply for any loan, lenders will always check your credit history before approving your loan. Your credit history contains information about your financial situation. Lenders will assess your credit history carefully to determine if you have the loan repayment capacity.

If lenders find your credit history to be clean, then you won’t face problems in applying and getting loans approved. However, if your credit history is poor, then most lenders will reject your loan application outright. What’s worse is that when your loan application gets rejected, your credit rating takes another hit.

Before approaching lenders for any loan, you must check your credit report to find out where you stand. You can also seek the help of professional finance consultants to obtain your credit score. Professional consultants such as Loans for People with Bad Credit can help you with a free credit check.

Let’s take a look at what a free credit check is and how it works.

What is a free credit check?

A free credit check is nothing but a statement of your current credit situation and your past credit activity. It includes information collected from various courts, credit providers and other organisations. Credit reports are prepared by credit reporting agencies, also known as credit bureaus or consumer reporting agencies.

What information can be found in a credit report?

Your credit report essentially contains information related to your details and your credit situation. It includes information about your credit cards, any arrears up to date, credit infringements and other defaults, debt agreements, credit applications, credit liability information, commercial credit applications, repayment history, and joint applicant details. Your report also includes information about which credit providers have requested for a copy of your credit check.

How long do defaults stay in the report?

If you have any credit payment defaults, these will be indicated on your report. Bankruptcy and Part IX debt agreements appear on your report for seven years.

In case you make payments for your defaults, the listing will remain on your report. However, your report will be updated to indicate that the default is paid in full.

How do you get a copy of your credit report?

You have the right to obtain a copy of your credit score for free annually by placing a request with an Australian credit reporting agency. It may take up to two weeks for the report to be provided to you.

What information you need to provide

You need to provide certain information to obtain your free credit check. This includes:

  1. Your full name
  2. Your date of birth
  3. Your current and previous addresses
  4. Your current and previous employers
  5. Your phone numbers
  6. An identity proof (driver’s license, birth certificate, passport or proof of age identity card)
  7. An official document which includes your name and your mailing address

What does your credit score mean?

Your credit rating is indicated by a number between 300-850. A score of 700 or above indicates that your credit rating is very good while a score of 800 or above indicates excellent credit rating. On the other hand, a credit score below 700 means that you are suffering from bad credit.

The credit scores of most people fall between 600-750. If you find your score to be less than 700, don’t panic. Go through your credit report thoroughly to check for errors. In case of any discrepancies, report the errors to your credit reporting agency immediately. Resolving errors on your credit statement will boost your score.

Even if your credit rating is poor, you need not worry. Many lenders will offer you loans on bad credit. You should seek the help of professional finance consultants to help you obtain a loan in such cases.

Apply for your free credit check today!

It is very important to obtain your free credit check before you apply for any loan. Your credit check will give you an indication of where you stand financially and if you ought to apply for loans. In case your loan application gets rejected, your credit rating will take a hit.

You can obtain your credit score by requesting a free report from your credit reporting agency. You are entitled to obtain one free copy a year. If you need more than one copy, you may be required to pay for it.

Professional finance consultants such as Loans for People with Bad Credit can help you be assessing your full financial profile and matching you to some finance options that will help you to move forwards, whatever your current credit situation.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

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