Understanding Your Credit Report
What information is on the report?
Your Credit Report contains various personal financial information about you. Your credit file is initiated by the credit provider the first time you ever apply for any type of credit. This may include application for a credit card, mobile phone plan, personal loan etc.
Credit Reporting Agencies collate your credit information and supply it to creditors such as banks and businesses to help them decide whether or not to give you a loan or extend credit.
Information in your Credit Report includes:
- Your Date of Birth
- Drivers License number
- Place of Residence
- Employment history
- A list of current and past credit application
- A history of past credit problems including defaults for unpaid debts, court judgements and bankruptcies
Credit applications and enquiries and overdue accounts remain on your file for 7 years, whereas Bankruptcy information is held on your file for 5 years.
Do I have bad credit?
Most people do not know that they have a bad credit rating until they are refused credit by a bank or a credit provider.
You can request a copy of your file for $69.95 including GST from any one of the main Australian Credit Reporting Agencies.
If you are prepared to wait, you are able to request a free copy of your credit report. A free report takes up to 10 days to be received.
For a free copy of your credit report visit : http://www.mycreditfile.com.au
What are credit defaults?
If you have ever taken out a credit contract such as :
- A credit card;
- A telephone plan
- Domestic equipment purchase on credit;
- A car Loan
- A personal loan
- A home loan
You have a legal obligation to make regular repayments as per your loan contract.
Failure to make regular repayments to the credit provider in line with your loan contract may result in the lender placing a “black mark” against your name on your credit report These are commonly known as defaults. Defaults are usually only placed on your credit history if you have gone without making the required payments for 2-3 months or more.
In most cases the lender will attempt to contact you first to sort out the payment delays informally. However if they can not find you or you are simply not able to make the required payments, a default may be placed on your credit report.
Even after you make a payment to repay a listed default it may remain as a paid default on your credit report for up to 7 years. This may affect you ability to qualify for finance.
Repairing your credit history
Credit Repair is the process of identifying bad credit event that were placed on your credit report inappropriately and getting them removed. Not all bad credit can be repaired.
consider the following:
- Is your credit file accurate? It may be that your report has not been changed to reflect payments made. Possibly defaults belonging to another person may be incorrectly placed on your credit file. You are entitled to request that the credit reporting agency corrects any errors that you find. There is a legal process that you can follow to have this done.
- A correctly listed and accurate default can’t be removed from your file. But paying outstanding amounts can improve the situation. It is worth negotiating to see if creditors will grant a longer repayment term or agree to part-payment.
- Saving regularly proves you are financially secure and able to repay debt.
- Establish a consistent employment record.
- Bankruptcy records remain on your credit report for five years but each item on your credit file is dated and automatically removed after seven years.
- Positive Credit Reporting due to be introduced in March 2014, will provide lenders with a fuller picture as to your financial circumstances and may assist many borrowers previously unable to obtain finance.