Masterclass

Understanding your credit report

Published on August 7, 2015 8:45 am, by

Every application for credit you make gives the lender the right to perform a credit check on you. 

Australians are allowed one free credit report each year.  Taking advantage of this protects you from errors, can alert you to identity theft attempts and ensures you are armed with all the information you need to confidently navigate any application process you are undertaking.

Your Credit Report: The Basic Information

Credit reports historically listed credit enquiries, serious credit infringements, and defaults. Today credit reports can contain additional data, such as approved credit limits, type of credit held, and your monthly repayment history on credit accounts like mortgages and credit cards.

Lenders make decisions based on this data and a history of late payments can reflect poorly on you. You could be penalised by being charged higher interest rates or having your credit denied.

Here’s what you can expect to find on a credit report from any of Australia’s four major credit reporting agencies:

  1. Identifying personal details such as your age, date of birth, employer, address history, and driver’s license number.
  2. Details about previous credit checks made by lenders.
  3. Information about your current creditors and the type of borrowing agreements you have, such as a mortgage, personal loan, and credit cards.
  4. Infringements of your credit agreement such as payments that are more than 60 days overdue.
  5. Legal information made public by the courts such as bankruptcy, writs issued against you and court judgments.

How do I access my credit report?

Australia’s four major credit reporting agencies are Veda.com.au, CheckYourCredit.com.au, Experian Credit Report and Tasmanian Collection Services (Tasmania only). It is advisable to check all of them as they may each report different information. (Additional reports are available for a fee.)

Checking Your Report: The Warning Signs

Always keep an eye out for any unfamiliar debts and credit applications.  Pay close attention to the “Overdue Accounts” section, which lists any accounts that have fallen into arrears.  It’s a good idea to pay off these debts as soon as possible — although once incurred they will remain listed on your credit report for five years.

The most extreme example of an overdue account is known as a “clearout,” which occurs when a credit provider has unsuccessfully tried to contact a debtor in writing and then reported them as missing. This generally happens when someone moves and doesn’t share their new address with credit providers. These more serious consumer credit infringements will remain on a credit report for seven years unless they’re paid, when they will then revert back to five years.

How to Deal with Errors

A routine check may reveal an overdue account or clearout that you had absolutely nothing to do with. If you find errors like these in your report, it’s important to act quickly and have them amended.

  • Debt-related errors — If you find debt details that are incorrect or out-of-date, the credit provider is obligated to update agencies on your status. If they refuse or ignore your requests, you can submit a formal complaint with the credit provider.
  • Other errors — If you find errors such as incorrect personal details (age, employment history, etc.), contact the credit reporting agency and be prepared with verification of any changes.

Taking just a few minutes every year to look over your credit report is a simple, yet powerful way to take control of your finances. You may find that you have some room for improvement, or you could actually discover that your history is better than you think. Either way, you’ll be armed with the precise details of your financial history, giving you the power to shop for the best deals with confidence.

Rob Chaloner is the Founder and Managing Director of stratton

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Rob Chaloner is the Founder and Managing Director of stratton, and is passionate about smarter ways to buy and finance cars. With stratton, he's working to help Australian buyers disrupt the traditional car buying, financing and insurance markets through smarter products and online services.

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