Banks and lending firms in Australia are concerned about your credit history for two reasons.
The first reason is for them (banks and lenders) to know that not only have you fulfilled your payment obligations from your previous debts, but did so in a timely manner. They want to make sure that financially, you are in a good position and have no reason that will hinder your ability to make timely payments. Lenders also check your records for any late payments or if you have defaulted on some debts or services which earned you a bad credit rating on your credit file or history.
The second reason is for the banks and lending firms to see if you have any other existing debts. This helps them understand on how much debt you are committed on a regular basis, and if you have enough resources to repay all the debts.
Lenders are always watchful of your creditworthiness. So if you’re applying for a business loan, this is one of the main considerations that they are taking into account when reviewing your loan application.
When applying for business loan, lenders will check your credit rating. This is requested from any of the credit report providers in Australia, two of which are Veda Advantage and Dun and Bradstreet. Banks and lenders contact any or both of these two firms to get your credit report.
Depending on the report, lenders will approve or reject your application for business loan.
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If rejected, you might be informed of the reason why your application has been disapproved. This gives you the opportunity to check your credit report and repair it accordingly if the report generated has no mistakes. As some Aussies are not aware or conscious of their credit performance in the past, a business loan application that generates the credit report allows you to review your credit history and make the necessary repair, accordingly.
Through a bad credit loan – a financial instrument designed for those with bad credit rating but have bank account, a regular income and business revenue, you will be able to repair and improve your bad credit report.
Information contained in your credit report lasts for about 5 to 7 years. This means that if you have a bad credit history, unless you have made the necessary ways to correct and fix your credit report by clearing your old debts, cancelling maxed-out credit cards, consolidating debt payments, etc., the information about your debt payment delinquency will stay on your records for a minimum of five years and up to 7 years.
The impact of this is that lenders will have second thoughts about granting approval to your business loan application if they don’t see that you have made efforts in updating your credit history and removing the bad credit performance from your record. Or, if lenders consider approval for your business loan, they are likely to impose higher interest rates and shorter loan terms in order to reduce their risk for lending you the money. Additionally, lenders are inclined to limit the amount they will lend you or require collateral or any form of security against the business loan you applied for.
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