Credit checks are an account of a person or an organization’s financial history. It is an indicator of the financial well being of an individual or a business. Credit checks are conducted across the world, by private as well as state owned organizations. Companies like TransUnion do credit checks of companies as well as individuals across several countries. Credit checks play an important role in determining the financial health of a person or business.
What Is A Credit Check?
In simple words, a credit check is an analysis of a person or a company’s debts, financial assets and history of loans and their subsequent repayments.
When a person or a business takes a loan, there is a repayment schedule. If a person or a business continues to repay the loan or the debt according to the repayment schedule, in due amounts without any fail, lapses or delay, then one enjoys a healthy or a good credit rating. The entire financial history of loans and debts along with their subsequent repayments is known as credit history.
A person or a business can have good credit, average credit or poor credit, depending on the history of repayments. People or companies who have defaulted any repayment of loans or have debts impending would be classified as having poor credit. People or businesses that have certain lapses in their financial history but not to the extent of defaulting loans or having debts unpaid or unsettled would have an average credit history. People or businesses would only have good credit ratings if they have not failed in any repayment, have manageable, insignificant or no debts at the present point in time and have sound financial assets.
Significance Of Credit Checks
Generally, credit checks have no major significance in a person’s life or a company’s existence. Credit checks become the most important factor when a person or a company tries to apply for a loan or seeks credit from any lender. The lender may be a bank or state owned institutions or private lenders. A person or customer with a good credit rating is a desirable client from lenders while people or companies with average credit ratings are treated with caution and less enthusiasm. People or companies with poor credit history or poor credit ratings are mostly not eligible for loans and credits from banks or even nonbanking financial corporations.
Thus, it is essential that people and companies undergo credit checks by TransUnion and be aware of their present credit rating. It is also necessary to maintain a good credit history to be eligible for loans and other financial products.
To have a credit check done on yourself, click here.