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Information in your Credit Report

Your credit report is a record of your credit history. It may include information on applications for credit that you have made in the past as well as information relating to your history of repaying credit card debts, personal loans and mortgages (including modified repayment arrangements due to hardship). Your credit report may also include publicly available information, such as court writs and judgements related to bankruptcies, personal insolvencies and debt agreements. Credit reports are available to all consumers who have a credit history. These reports are built using information provided by credit providers as well as public record information.

Your credit report is a record of your credit history. It may include information on applications for credit that you have made in the past as well as information relating to your history of repaying credit card debts, personal loans and mortgages (including modified repayment arrangements due to hardship).
Information in your Credit Report

In your Credit Report you will find information about your history with credit. Your Credit

Report is divided into a number of sections:


1. Personal information / identity details

This includes information like your name, date of birth and names you may be also known as. It may also include your driver’s licence number, as well as a list of places you have worked and addresses where you have lived or operated a business from.


2. Your Credit Score

Your Credit Score will be a number between 0-1200 and is based on your credit information held by a credit agency. In simple terms, the higher your Score, the better your credit profile and the lower credit risk you are.

There are a number of key attributes that are taken into consideration when generating your Credit Score:

  • The type of credit being applied for ie Mortgage, Credit Card, Mobile Phone Plan etc.

  • The number, type and age of any credit facilities you have opened or closed in the last 24 months and whether you have missed any payments.

  • Age of your credit file (report).

  • Your personal details including any directorship and proprietorship information.

  • The number of credit enquiries and any negative events, such as missed payments, defaults or bankruptcies.

It is important to note that the way the Credit Score is used in practice by lenders may differ to the way it is shown in your Credit Report or displayed in the Credit and Identity portal. Each lender may also apply their own lending criteria and policies, and in some cases their own scores, which is why some lenders may approve your application while others will not.


3. Credit Rating

This rating helps you to understand your level of risk, based on your Credit Score, compared to the Australian credit-active population held by a credit agency. The Credit Rating is based on historical analysis that determines how likely an adverse event will occur, such as a default or any account/ loan that reaches 90 days past due in the following 12 months after the credit application. This is a key determining factor in whether you are likely to be able to repay future credit.


Set out below is a description of the five Credit Rating bands used by a credit agency:


0-459 - Below Average

If your Credit Score is within this band, there is an above average possibility an adverse event will be recorded on your Credit Report in the next 12 months. Factors with the biggest impact/most common on scores in this band are as follows:

  1. Payment defaults, late payments (30+ days) or default judgements reported

  2. The number and type of credit applications (with frequent applications for unsecured lending)

  3. Use of short term credit facilities (like Payday or Buy Now Pay Later)


If you are in this band, you can generally improve your score by:

  • ensuring all bills and credit payments are made on time; and

  • restricting the number of applications you make for new credit.


460-660 - Average

If your Credit Score is within this band, there is an average possibility an adverse event will be recorded on your Credit Report in the next 12 months. Factors with the biggest impact/most common on scores in this band are as follows:

  1. The number and type of credit applications (with frequent applications for unsecured lending)

  2. Multiple credit applications in a short time frame

  3. Instability of residence or employment


If you are in this band, you can generally improve your score by:

  • ensuring all bills and credit payments are made on time; and

  • reducing any unnecessary credit facilities such as multiple credit cards.


661-734 - Good

Scores in this category indicate that an adverse event is less likely than average to be

recorded on your Credit Report in the next 12 months. The odds of no adverse events occurring on your Credit Report in the next 12 months are better than the average population odds. Factors with the biggest impact/most common on scores in this band are as follows:

  1. The number and type of credit applications

  2. Demonstrating no arrears/defaults

  3. Length of credit history


If you are in this band, you can generally improve your score by:

  • limiting applications for unsecured credit


735-852 - Very Good

If your Credit Score is within this band, it is unlikely an adverse event will be

recorded on your Credit Report in the next 12 months. In other words, the odds of no adverse events occurring on your Credit Report in the next 12 months are more than 2 times better than the average population odds. Factors with the biggest impact/most common on scores in this band are as follows:

  1. Demonstrating no arrears/defaults

  2. Length of credit history (evidence of longer term credit relationships)

  3. The nature and frequency of credit applications


If you are in this band, you can generally improve your score by:

  • reducing/minimising credit enquiries and credit applications


853-1200 - Excellent

If your Credit Score is within this band, an adverse event is highly unlikely to be recorded on your Credit Report in the next 12 months. In other words, the odds of no adverse events occurring on your Credit Report in the next 12 months are more than 5 times better than the average population odds. Factors with the biggest impact/most common on scores in this band are as follows:

  1. Demonstrating no arrears/defaults

  2. Length of credit history (with evidence of longer term credit relationships)

  3. Residential mortgage activity


If you are in this band, you can generally improve your score by:

  • continuing to pay on time; and

  • limiting exposure to unsecured credit.


4. Consumer credit information

The consumer credit information section of your Credit Report includes:


Details of credit enquiries that have been made on you by a credit provider when you have made an application for consumer credit. Consumer credit relates to loans for household

or family purposes as well as for the purchase, renovation or refinancing of a residential investment property. Well-known types of credit include credit cards, mortgages, personal loans, car loans and credit contracts. Credit contracts are typically used by businesses – such as utility providers and telecommunications companies – that provide a good or service upfront and get paid for it at a later date. The ‘buy now pay later’ store finance and store cards many retailers offer are also a type of credit.


Consumer credit liability accounts – this may be an account that you currently have open or have had open in the past. Your Credit Report may include information about the type of consumer credit liability account you had or have, as well as its credit limit and open and/or

close date. Please note that not all credit providers supply consumer credit liability information to credit reporting bodies (such as ).


Monthly repayment history on credit accounts such as mortgages, personal loans and credit cards. This reflects whether you have paid the minimum amount required on time each month or not. It will also include information on any defaults or financial hardship arrangements in relation to your accounts. Please note that not all credit providers supply repayment history information to credit reporting bodies (such as ).


Overdue accounts such as defaults, new arrangements on your defaults as a result of

financial hardship and serious credit infringements


Public record information like:

  • Court judgements

  • Directorship details

  • Proprietorship details

  • Bankruptcy, debt agreement and personal insolvency


5. Commercial credit information

This is information about credit enquiries that have been made on you for commercial credit. Common types of commercial credit are a work-mobile-phone contract, business loan and business credit card. It may also include details of any overdue commercial credit accounts and other debts.


6. File access information

This is information about third parties that have accessed your Credit Report. These third parties may include brokers and credit repair agencies. For example, if you request a copy of your Credit Report from a credit agency, the fact that the agency has accessed your Credit File in order to provide your Credit Report will be noted.


Conclusion

Understanding the components and factors influencing the credit report is essential for maintaining good financial health. By taking proactive steps to manage credit responsibly, individuals can improve their credit scores, secure better loan terms, and achieve their financial goals. Engaging the services of a seasoned mortgage broker like Steve Keramidas can further streamline the process and provide valuable guidance on navigating the complexities of credit reports and scores.


 

Disclaimer: This article provides general information only and may not reflect the publisher’s opinion. None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication. This publication or any part of it may be reproduced only with the publisher’s prior permission. It was prepared without taking into account your objectives, financial situation or needs. Please consult your financial adviser, broker or accountant before acting on information in this publication.

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