How do credit checks work in Australia? 

Whether you’re applying for a loan, credit card, rental property, or applying for some types of employment, credit checks play a role in the decision-making process. Your credit history will often be a determining factor in whether you’re successful and can have a big impact on your application. 

Let’s explore how credit checks work in Australia and find out what they are, how they work, what they show, who can perform them and what happens if you have a bad credit history. 

What are credit checks?

Credit checks are also known as credit inquiries or credit assessments, and they provide insight into your credit report and history. A credit check will help evaluate your creditworthiness and assess your ability to manage and repay debts. 

Your credit report can be checked through three credit reporting bureaus, Experian, Equifax and Illion, which have their own credit scoring models. There are two types of credit checks:

Soft credit check

Soft credit checks provide a basic overview of your credit history, confirming your identity without impacting your credit score. They aim to verify your identity and don’t leave a mark on your credit report. With a soft check, the organisation will see an overview of your credit history, as well as your name, date of birth, and your previous and current address.

Hard credit check

On the other hand, hard credit checks offer a more detailed view of your credit history and are used by lenders to assess your creditworthiness. It will allow them to see how you have repaid debt in the past and demonstrate what risk you pose to the organisation. Hard credit checks are marked on your credit report. 

How do credit checks work in Australia?

Credit bureaus collect information on your credit history from lenders and other organisations around Australia. They use this information to prepare a detailed credit report and calculate your credit score. 

When a lender or other organisation wants to conduct a credit check, they will ask for a copy of your credit report from these credit bureaus to determine your creditworthiness and eligibility. Your credit report can be a little different between bureaus as they have their own models to calculate your credit score. 

Who can check your credit? 

Not everyone can conduct a credit check, they need to have a suitable reason. Some examples of organisations that conduct credit checks (hard or soft) include: 

• Banks.
• Lenders.
• Landlords.
• Mobile phone providers.
• Employers.
• Insurance providers.
• Utility companies. 

What information is included in a credit check? 

With a soft check, they will show limited information from your credit report, so they can verify your information and your credit score. A hard credit check will show more detailed information on your credit history as well as your credit score. 

What happens if you have a bad credit history? 

Having a bad credit history can have many negative consequences, including: 

• increasing the difficulty of obtaining a loan or credit
• higher interest rates
• higher insurance premiums
• challenges in securing a rental property 
• difficulty in obtaining employment
• limited utility options. 

How to repair bad credit in Australia

Thankfully, it is possible to repair bad credit in Australia. At Fix My Credit, we can help you improve your credit to increase your chances of a successful outcome.

By using our professional credit repair company, you can:

• Restore your credit. 
• Fix your credit score.
• Remove defaults, court judgements and clearouts. 
• Find solutions to solve your debt. 

Check out this great article to find out why good credit is so important!

If you are considering applying for credit or know an organisation will be conducting a credit check, Fix My Credit can provide you with a full credit report so you know what to expect before applying. Contact us today to get started and let’s improve your credit history together!