If you’ve got a credit card, personal loan, mobile phone plan or utility account, there’s probably a credit reporting agency out there that has a file with your name on it.
Didn’t have a clue about this? Well, you’re not alone—59% of Australians haven’t heard of credit reporting.1
With that in mind, we’ve pulled together some important information, which you’ll want to read, given that government figures show 30% of Australians who’ve requested their credit report have found mistakes in it.2
What’s in a credit report?
A credit report is an assessment of your credit-worthiness. It contains information3 such as:
- Your personal details
- The credit cards you hold
- Any credit you’ve applied for, including loans where you’ve gone guarantor
- Details about your repayment history
- Joint applications, if you’ve applied for credit with another person
- Unpaid or overdue debts that you have now paid or settled
- Defaults and other credit infringements
- Bankruptcies, court rulings, debt and personal insolvency agreements
- Commercial and business loans you’ve applied for
- Credit providers who’ve requested a copy of your report.
Who is collecting the information?
The main credit reporting agencies in Australia are Veda, Dun & Bradstreet, Experian and the Tasmanian Collection Service, and you could have a report with more than one of them.4
Credit providers and other bodies send details to these agencies and then credit providers will use the information to assess whether they want to lend to you, and the likelihood you’ll pay what is owed.5
Does a black mark on your report matter?
Consumer group Choice says a tarnished credit report could affect your ability to get instant approval on a loan or credit card. You could also be knocked back completely or charged a higher interest rate.6
As each lender will assess your credit file against their own policies, there may be instances where some approve your application, while others reject it or delay the process.7
How long does information stay on file?
Your repayment history stays on file for two years. So does information about any delay of more than 14 days in credit card, home loan or personal loan repayments.8
Default information stays on file for five years. This includes bankruptcy and any instances in which you’ve defaulted on consumer credit, where money owed is over $150 and more than 60 days late.9
Does it cost money to access your report?
A credit reporting agency must provide you with a free copy of your credit report once a year and within 10 days of your request. If you want a copy in a shorter time frame though, it could cost you.10
What if the credit agency has made a mistake?
If you think there’s a discrepancy in your report, contact the credit provider. You can dispute the listing and if they agree it’s wrong, they’ll ask the credit reporting agency to remove it.
Can a credit repair company help if you’re in strife?
ASIC says credit repair companies may not always be able to do what they claim. This is because in most cases, information cannot be removed from your credit report unless it’s proven to be wrong.11
These companies can be useful if you don’t have time to look into things yourself, but it’s vital you understand their terms, whether their plan of action is a good financial decision for you and what they’re charging, as fees are often high.12
How can you manage debt effectively?
CreditSmart, which was developed by credit experts with consumer advocates and government bodies, suggests the following:13
- Only apply for credit you need and can repay
- Ensure credit providers have your up-to-date details
- Tell your credit provider if you’re having money troubles and find out what the options are
- Consider rolling debts into one consolidated loan
- Review your credit report annually
- Close down unused credit card accounts
- Review your statements for incorrect or suspicious transactions.
It can take years to turn a bad credit rating around, but you can start taking control of your finances today.
We’re here to help
1 Australian Retail Credit Association - Submission to the Financial System Inquiry
2 Office of the Australian Information Commissioner - Research Report
3, 4, 5, 10 ASIC MoneySmart – Credit report information
6, 8, 9 Choice – How to protect your credit rating
7 Mycreditfile FAQ’s
11, 12 ASIC MoneySmart – Credit repair information
13 CreditSmart - frequently asked questions
Paying off debt
Check out our education module on how to take control of debt. It will provide you with some general information about minimising the costs associated with borrowed funds.
If you’re over living on instant noodles, check out these tips and tools to ensure you’ve got money tomorrow and in the long term.