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

By Angela Monroe - April 7, 2022

free credit check

Checking your credit report (and credit score) is hugely important when it comes to getting a car loan and when doing that is free, it’s even better – but how? And, what does it all mean? 

We explain.

The gist of a free credit check

When you apply for a loan, lenders check your credit history before approving your loan. Know how a free credit check works and understand your credit history. 

Your credit history contains information about your financial situation, including past and present loans, any missed or late repayments among other things. Lenders assess your credit history carefully to determine if you have the loan repayment capacity.

After all, lenders want to approve people because that means they become their customers, and, like any business, they want customers.

If lenders find that your credit history can support a loan, then you won’t face problems in applying and getting loans approved. 

However, if your credit history is poor, you run the risk of lenders rejecting your loan application. 

What’s worse is that when your loan application gets rejected, your credit rating takes another hit.

HINT: Before approaching lenders for any loan, check your credit report to find out where you stand or seek the help of professional finance consultants. 

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?

Other ways unemployed people get car loans

A free credit check means viewing your current credit situation and your past credit activity. It includes information collected from various credit providers, including phone and energy companies and other organisations. Credit reports are prepared by credit reporting agencies, also known as credit bureaus or consumer reporting agencies.

Note that simply viewing your credit report with a free credit check and having a professional check it and discuss it with you will not affect it, just like reading or viewing a school report won’t affect the grades.

What information can be found in a credit report?

Your credit report essentially contains information related to your personal details and your credit situation. 

For example, a credit report can contain things like;

  • Past and present addresses
  • Past and present loans
  • Past and present loan applications
  • Repayment history
  • Any court rulings
  • And bankruptcies
  • Outstanding debts

Of course, everyone’s is different and credit reports don’t go back “forever” in time to even if you make a mistake, it’ll eventually come off your credit report.

They also contain 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 do you get a copy of your credit report?

Car Loan Mistake_ Refinancing

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.

If you want yours sooner than 2 weeks or request multiple reports within a short period of time, you often have to pay a fee.

What information do you need to provide to get your free credit check?

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

  • Your full name, DOB and phone number
  • Your addresses and possibly current and previous employers
  • ID (driver’s licence, birth certificate, passport or proof of age identity card)
  • Possibly an official document which includes your name and your mailing address

What does your credit score mean?

Car Loan After Repossession Summary

When getting a free credit check, you’ll see your credit score – something super important when applying for finance.

Your credit rating is indicated by a number, typically maxing out at 1,200 and in some cases, it can go below zero.

A score of around 550 is average but having a score lower than that doesn’t mean you can’t get a loan.

The higher the score, the better and most people look at it like a car’s speedo – just because a Toyota Corolla’s speedo goes up to 220km/h, doesn’t mean it’ll go that fast, it’s more a gauge.

Someone with a long credit history over many years and who has never applied for too many loans and never missed any repayments is likely to have a higher score.

If you find your score to be less than average, 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 can 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.

Get your free credit check today!

woman on phone and laptop

Obtaining your free credit check before you apply for any loan is a cinch. Your credit check will give you an indication of where you stand financially and if you should apply for loans or wait and increase your credit score.

Remember, in the event your loan application gets rejected, your credit rating will take a hit.

Professional finance consultants such as Loans for People with Bad Credit can assess your full financial profile and match you to finance options suited to your situation.

You might be surprised by just how many good options you have!

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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