Credit Report Australia

A credit report is the major factor a lender, whether it’s a mortgage broker, an automobile financing agent, a credit card company, or a bank, will analyse to determine whether a to extend credit to a consumer. Veda Advantage, Australia’s credit reporting agency, assembler’s a borrower’s credit information from all major lenders to compile it into a credit report. When applying for any type of loan in Australia, it’s very important for prospective borrowers to understand exactly what information is included in a credit report, what data is not listed and, most importantly, what their individual report looks like. Finding out the status of your own credit report well ahead of time better prepares you for the loan process and will give you a chance to fix any mistakes or other issues, too.

What is in My Credit Report?

In some countries a credit reports contain every single bit of an individual’s credit history. This includes records of every credit account, including personal loans, mortgages, credit cards and car loans that a person has ever had. Payment histories are listed, including all current debt, detailed explanations of whether payments were made on time, how frequently and how high above the minimum amount payments were made. Australia has more strict privacy laws, which actually help the consumer by limiting the amount of data that can be listed in a credit report. As opposed to credit reports in other countries, Australian credit reports will only list:

  • Vital personal data such as name, date of birth and driver’s license number.
  • Supplemental personal information like addresses and employment history (but only if this data was ever listed on a credit application.
  • Negative marks:
    • Defaulted loans and clear-outs
    • Past due accounts
    • Bankruptcy filings
    • Judgments
  • Number of credit enquiries in the past 5 years
  • Some information on current accounts, but only if the lender decides to report it. This is rare.

More Privacy Means More Credit Worthiness

As you can see, the Australian borrower is in a much better position. In countries like the United States, borrowers are judged not just by negative factors, but also by how much current and past debt they have. In Australia, it is rare that current creditors report to credit bureaus if a customer is in good standing. Borrowers have it much easier here in Australia where a credit report could almost be seen in the same light as a criminal record; only transgressions are recorded. This similarity can be taken further when you consider that a credit report’s information is actually cleared at regular intervals with good behaviour. Negative data like bankruptcies usually only stays on an Australian credit report for seven years. Some items, like overdue accounts, actually only stay on a credit report for five years. This means that even borrower with “bad credit” can correct things and eventually qualify for loans. In other countries, blemishes on credit records can affect borrowing power for a considerably longer period of time.

Credit Reports: What Are Lenders Looking For?

It doesn’t matter if you’re applying for unsecured, revolving debt like a credit card or secured, instalment debt like a home mortgage or an auto loan. All lenders are in the business of lending money and charging interest to make a profit. Because of that, a lender decides whether to extend credit, and what terms to assign to a loan, based on your credit history. They want to make sure a borrower has an unblemished history of repaying loans.

In Australia, as mentioned earlier, all a lender has to go by is a report on whether you have declared bankruptcy, defaulted, made repeated late payments, and other negative factors of a similar nature over the past five to seven years. Creditors, for the most part, will not know what your current monthly expenditures look like at all, so these harmful attributes are all they can use to decide a customer’s credit worthiness.

  • Credit enquiries: banks usually can’t see your current debt and have no record of credit cards at all, but the number of enquiries over the past five years could give them an idea of your recent debt. Any more than two enquiries in a calendar year looks bad in their eyes and can seriously jeopardize a borrower’s ability to obtain a loan.
  • Bankruptcies: to a lender, a bankruptcy says “here is a considerable amount of debt that I was unable to pay.” This is usually the number one reason a bank will turn down a loan application and, as such a bankruptcy will remain on a person’s credit history for seven years. Banks want to know if you can pay back debt, and a bankruptcy filing – regardless of whether or not it was discharged – tells the lender on no uncertain terms that you cannot.
  • Overdue accounts and late payments: a lender not only wants you to be able to pay; they want you to be able to pay on time. Accounts more than 60 days past due are reported to the credit bureau and become part of your credit report, regardless of whether you did get around to paying them. Overdue account information will remain on your credit report for five years and will hurt your chances of getting a loan.

Fixing Your Credit Rating When It’s Your Fault

The bad news here is that if your credit report shows bankruptcy, overdue accounts, missed payments or a high number of enquiries, there is really no way to fix it. It’s simply too late to repair your credit once these negatives make it to a credit report. All a customer with bad credit can do is start acting responsibly toward debt now by making the correct payments on time consistently. Only time can fix a credit report once it has been damaged by the actions of an irresponsible borrower.

Fixing Your Credit History When It’s Not Your Fault

The banking industry has become a mammoth and complex business. The human element has been removed as global banks have automated all steps of business on a global scale. One misplaced routing number or misapplied check in this gigantic machine can doom your credit. Banks do make mistakes, and these blunders can affect a borrower’s credit if they are not vigilant. By obtaining a copy of your credit report on a regular basis, and keeping detailed records of all payments, you can be ready to dispute and black marks placed on your record through no fault of your own. A payment sent on time could easily be lost or not recorded on time, resulting in a “late payment” issue on your credit report. Problems like these can be disputed by smart consumers. Paying constant attention to your credit report is the only way to truly guarantee a clean record and increased buying power when the time comes to get a loan.