Credit Bureaus, Credit Scores & Debt: How they work together

Credit Bureaus can seem like a rabbit hole when you start looking into them. These bodies have a significant place in the world of finance, lending and debt recovery in Australia; how they work together with other services is essential for business owners to understand.

What are Credit Bureaus?

Credit Bureaus are agencies that hold financial information about both individuals and companies. They collect information about credit ratings and supply this information to credit providers. They calculate the information provided to them and give a numerical score between 0 and 1, 200. The higher the number, the ‘safer’ that entity is to lend to.  

How is a Credit Score Calculated?

When a credit reporting agency calculates a credit score on an entity, to give to a credit provider, there are a few different things that go into calculating that report. For example, a few different things that can be reported on include:

• The number of applications that the entity has made for credit
• Whether they have paid credit providers on time
• The amount of money the entity has borrowed
• Negative information provided from providers such as infringements, bankruptcies and defaults

There are a number of other factors that can also go into formulating a credit score, such as age, location, length of employment and the age of your credit history.

Where do Credit Bureaus Get Information From?

Credit Bureaus mainly get their information from creditors. This can include banks, finance companies, credit card issuers and telecommunications companies. They can also access information about entities from public records that can include business records, court records and property ownership information.  Each bureau may hold different information and have varying sources that they gather that from.

Who do They Give Information To?

Access to information regarding your credit score is sensitive and credit bureaus take privacy very seriously. Because of this, only certain classifications of entities can view a credit report. Firstly, the individual or business that the credit report is about can request a copy. Other viewers that can apply include:

• Lenders you are seeking, or have sought credit from
• Debt Collection Agencies
• Utility and telecommunication companies
• Employers in certain circumstances
• Government agencies
• Insurance companies
• Real Estate companies and/or landlords

How Do Credit Bureaus and Debt Collection Work Together?

Occasionally, being contacted by a debt collector is not enough to prompt a debtor to make payment. An important part of our process is being in contact with credit bureaus. We can both provide them with information regarding a debtor, or they can provide us with information about someone who is seeking credit from one of our clients.

Can Credit Bureaus Help the Debt Collection process?

We have a partnership with a credit bureau that allows us to leave a negative footprint on a debtors account. These negative footprints can help the natural debt collection process, by providing incentive for payment. We can place either mercantile enquiries or at times payment defaults onto a business’s credit file. These remain on an account to be available for viewing, as well as being taken into consideration during calculations that form a credit score.

We have access to different credit bureaus that are associated with major Australian banks, finance providers and utility companies. At Henley Recoveries Group, we have the capacity to view credit reports that will denote how risky a potential client may be to provide service to prior to payment. This is a service we provide to our clients, alongside placing these footprints on debtor accounts, if they are unresponsive or unwilling to make payment. Credit bureaus work hand-in-hand with the debt collection process to provide an incentive for payment and act as a consequence for a non-payment.

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If you have any questions regarding credit bureaus, credit reports and payment defaults, please get in touch with our team at info@henleyrecoveriesgroup.com.au, or view our services here.