A credit report summarises a person’s credit commitments and any CCJs or defaulted payments. Credit scores are updated every 45 days approximately, but in most instances, a credit report will give lenders and employers a realistic overview of a person’s financial history.

There are three credit reference agencies, also called CRAs, so the information listed on each can vary. The three main reporting agencies are Equifax, Experience, and TransUnion, and each can show varying information, including the following.

Bankruptcies

Bankruptcies are created when a person cannot pay their debts. Companies or individuals can use Chapter 7 bankruptcies. An individual can only use Chapter 12 bankruptcy. Bankruptcies will continue to show on a credit report for approximately six years after the order is made.

Accounts Sent to Collections

If a business has tried to recoup payment but has been unsuccessful, the company will send its account to a collections department. Although common for credit cards and loans, collection accounts can apply to rent payments, mobile phones, and satellite television.

Soft and Hard Credit Check Enquiries

As companies can use credit checks for identity checks, two types of enquiries are carried out. A soft credit check is often used for job applications or pre-approved credit offers. These types of checks do not affect a person’s credit score.

However, those applying for credit will incur a hard credit check, which stays on a person’s account for two years. These types of credit searches can impact a credit score, so it is essential permission has been given beforehand.

Is There Information Not Shown on a Credit Report?

Although a credit report shows financial details, the information only relates to debt. As such, only credit cards, loans, and mortgages will show on a credit search. Any information regarding savings and current accounts will not be displayed, as this isn’t debt.

A credit report will also dismiss any information irrelevant to credit applications, such as marital status, race, disabilities, and religion.

Ensuring a Credit Report is Carried Out Correctly

Those wanting to check their credit file can make a request to the relevant agencies. You may need some form of identification if you have difficulty locating your credit file. Still, each agency will inform you of the necessary next steps for obtaining your score.

A business carrying out a credit check must obtain the person’s permission and personal details. In addition to a credit search, companies may conduct other forms of background screening, including DBS Checks.

A company must also ensure that any supporting documentation given is legitimate so it will take advantage of online document verification.

Carrying out a credit check for the first time can be overwhelming, but there is plenty of support for businesses that need to carry out credit checks continuously, ensuring there is little disruption regarding day-to-day operations.