Credit Score Analysis

Many lenders are now not bothering to “review & assess” loan applications on their individual merits, rather work off the Credit Score that is generated by the Credit Reporting Bureau and approving/declining a loan application facility irrespective of what the true the financial credibility of the applicant is!

Given this, it is vitally important that all Consumers and non-consumer entities review their consumer and commercial credit files to ensure (i) the information that is held is accurate, (ii) that information held is not deprecating to the credit score algorithms’ used by the Credit Reporting Bureaus.

Something as simple as holding directorships in multiple corporate entities, even if there are no personal liabilities with these corporations, will be enough to crash your credit score and could cause your next Credit Application to be declined automatically.

We Fix Credit specialises in analysing Customers Individual Consumer and Commercial Credit Files along with their Corporate/Business Credit Files and assist with rectification programs to improve the way in which the various Credit Reporting Bureau’s algorithms interpret the information held on these files. For more information, please contact us today for an obligation free discussion on how we can assist you.

In order to reduce costs and streamline loan application processes for their subscriber customers the various Credit Reporting agencies have developed their own Credit Score algorithms’ based upon the historical data that these entities hold on all the credit files they hold in their database to ensure the value of this information is such that it can be sold and used. The information contained in an individual’s Consumer and Commercial Credit File dictates what that score will be for that particular Credit Reporting Bureau. It therefore will be quite common for credit scores for the same individual to vary significantly with each of the Credit Reporting Bureaus.

The use of credit scoring is not new, however started to become a tool of choice with the major retail consumer lenders such as the Commonwealth Bank, NAB, ANZ Westpac and others from early 2000. The cost of employing Loan Processing Officers saw the Banks start automating their Application Process to dispense with the cost of employing these people. Consumers were encouraged to apply on-line with the Internet for their Personal Loans and Credit Cards. The engagement of actuaries to research these lender’s historical data on current and previous loan customers to establish various profiles and develop algorithms which would, according a point score system, would either approve an application or decline it! Simple situations where a customer had three enquiries within three months or six enquiries within six months would trigger an automatic decline for these consumer products. The length of time in employment and residential history also play a part and the list goes on.

Since then the Credit Reporting Bureaus’ have refined and developed the process where the Lending Institutions now use the Credit Reporting Bureau’s data rather than their own.