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If you’re thinking about applying for a home loan, car loan, personal loan or other type of finance, before you hit “apply,” there’s something important to understand about how an application could impact your credit report..
You may have heard people talk about their “credit score” or “credit file”, but your credit report contains much more than just a number.
It provides a record of certain information about your credit history and can help lenders understand how you have managed credit over time.
So, what exactly is on your credit report and what should you be looking for?
Let’s break it down.
What is a credit report?
A credit report is a record of information relating to your credit history.
Credit reporting bodies collect certain information provided by credit providers and other permitted sources. When you apply for credit, a lender may access your credit information as part of assessing your application.
Depending on your circumstances, your credit report can contain information about credit accounts you hold or have previously held, repayment history, credit applications, defaults and other relevant credit information.
In Australia, there are several credit reporting bodies, including Equifax, Experian and illion.
This also means that the information held about you may not necessarily be identical across every credit reporting body.
Is a credit report the same as a credit score?
Not quite.
Your credit report contains information about your credit history.
Your credit score is generally a number calculated using information from your credit file and other factors within the credit reporting body's scoring model.
Think of it this way:
Your credit report tells the story. Your credit score helps summarise it.
Different credit reporting bodies may use different scoring systems, so your score can vary depending on where you obtain it & the type of report ordered.
Rather than focusing solely on the number, it can be useful to understand what information is actually sitting behind your score.
What information can appear on your credit report?
Your credit report may contain several different types of information.
1. Your personal information
This can include identifying information such as your:
- Name
- Date of birth
- Current or previous addresses
- Employment information, where applicable
It’s worth checking that these details are accurate, particularly if you have changed your name or moved addresses.
2. Credit accounts
Your report may contain information about certain consumer & commercial credit accounts you hold or have held.
Depending on the account and information reported, this may include details such as:
- The credit provider
- Type of credit account
- When the account was opened
- Credit limit
- Whether the account is open or closed
This forms part of Australia's comprehensive credit reporting system.
3. Repayment history information
Repayment History Information, often referred to as RHI, can show whether repayments on eligible credit accounts were made on time.
If a repayment falls behind, this may also be reflected within the repayment history recorded on your credit file.
Your repayment history can therefore be an important part of understanding your overall credit position.
4. Financial hardship information
If you have entered into certain financial hardship arrangements with a credit provider, information relating to that arrangement may also appear on your credit report in accordance with Australia's credit reporting rules.
Experiencing financial hardship can happen for many reasons illness, injury, loss of employment, family circumstances or unexpected financial pressure.
If you are struggling to meet repayments, speaking with your credit provider about hardship options early can be important.
5. Credit enquiries
When you apply for credit, an enquiry may be recorded on your credit report.
Examples can include applications for:
- Home loans
- Personal loans
- Car finance
- Credit cards
- Other consumer credit products
- BNPL accounts
- Utility accounts
This is one reason we encourage people to be concious about repeatedly applying for finance, particularly after an application has already been declined.
Submitting applications to multiple lenders doesn't necessarily solve the underlying issue affecting your credit position and may result in additional enquiries appearing on your file and impacting your credit score.
6. Defaults
A default is a more serious credit listing that may appear when an eligible overdue debt meets the requirements for default reporting.
Seeing a default on your credit report can be confronting, particularly if you weren't expecting it.
However, it is important to understand why the default was listed, whether the information is accurate and what circumstances surrounded the account before assuming what can or cannot be done about it.
Simply paying a debt does not necessarily mean the default listing will automatically disappear from your credit report.
We'll explore defaults including how they work and circumstances where a listing may be disputed in a separate guide.
7. Other public or credit-related information
Depending on your circumstances, your credit report may also contain certain publicly available or credit-related information permitted under Australian credit reporting laws.
This can include information such as certain court judgments, insolvency information or other relevant credit information where applicable.
Why should you check your credit report?
One of the biggest mistakes people can make is waiting until they are already applying for finance to find out what's on their credit file.
Imagine finding your dream home, speaking with your broker and only then discovering an unexpected credit issue.
Checking your credit report beforehand gives you an opportunity to understand your position before making further credit applications.
When reviewing your report, consider checking:
- Are your personal details correct?
- Do you recognise the credit accounts listed?
- Is your repayment history accurate?
- Are there credit enquiries you don't recognise?
- Are any defaults or other adverse listings showing?
- Is there information you believe may be incorrect or incomplete?
If something doesn't look right, don't simply ignore it.
Will checking my own credit report hurt my credit score?
Obtaining your own credit report is different from submitting an application for credit.
Reviewing your own credit information does not mean you're applying for a new loan.
This is one reason checking your credit report can be a useful step before approaching lenders.
What if I find something I don't recognise or believe is incorrect?
Don't panic and don't immediately start applying elsewhere.
First, identify exactly what the listing relates to.
Gather any documents, emails, account statements or correspondence you have relating to the account.
Depending on the issue, you may need to contact the relevant credit provider or credit reporting body to request further information or raise a correction request.
Credit information cannot simply be removed because someone would prefer it not to be there. However, if information is inaccurate, incorrectly reported or there are other relevant circumstances surrounding a listing, there may be options available to investigate or dispute it.
Every situation is different.
Planning to apply for finance?
Before applying for finance, consider taking the time to understand your credit report first.
A few minutes reviewing your credit file could help you identify an issue before it becomes a surprise during a finance application.
And if you aren't sure what you're looking at, that's where getting some guidance can help.
Not sure what's affecting your credit file?
At One Stop Credit Fix, we help clients understand what's appearing on their credit reports and investigate credit issues that may be affecting their financial position.
We can review your credit report, explain the listings in plain English and discuss what options may be available based on your individual circumstances.
Your credit report tells a story. Make sure you understand yours before your next finance application.
Want help understanding your credit report? Contact One Stop Credit Fix to discuss your credit file.
This article provides general information only and does not constitute legal, financial or credit advice. Credit reporting outcomes depend on individual circumstances and applicable Australian credit reporting requirements.
