All about Credit Report
What is a Credit Report and What Does it Include?
A credit report is a summary of how you have handled credit accounts, including the types of accounts and your payment history, as well as certain other information that’s reported to credit bureaus by your lenders and creditors.
Potential creditors and lenders use credit reports as part of their decision-making process to decide whether to extend you credit — and at what terms. Others, such as potential employers or landlords, may also access your credit reports to help them decide whether to offer you a job or a lease. Your credit reports may also be reviewed for insurance purposes or if you’re applying for services such as phone, utilities or a mobile phone contract.
For these reasons, it's important to check your credit reports regularly to ensure the information in them is accurate and complete.
The three credit bureaus that provide credit reports nationwide are Equifax, Experian and TransUnion. Your credit reports from each may not be identical, as some lenders and creditors may not report to all three. Some may report to only two, one or none at all.
Your credit report contains the following types of information:
This section of your credit report includes personal information, such as your name, address, Social Security number, and date of birth. The identifying information contained in your credit report is not used to calculate credit scores.
Credit account information
This information includes the types of accounts (for example, a credit card, mortgage, student loan, or vehicle loan), the date those accounts were opened, your credit limit or loan amount, account balances, and your payment history.
There are two types of inquiries: “soft” and “hard.”
“Soft” inquiries may result from your checking your own credit reports, companies extending you pre-approved offers of credit or insurance, or your current lenders and creditors conducting periodic reviews of your accounts (known as “account reviews.”) Soft inquiries do not impact credit scores. Regularly checking your credit reports can help you monitor your credit accounts and enable you to recognize inaccurate or incomplete information, or suspicious activity that may signal potential identity theft.
“Hard” inquiries occur when companies or individuals, such as a credit card company or loan servicer, review your credit report because you have applied for credit or a service – for example, a new loan, a credit card, or a mobile phone contract. Hard inquiries remain on your credit report for up to two years and may negatively impact credit scores, although the impact may lessen with time.
Your credit report contains information about bankruptcy public records and related details such as the filing date and chapter (type of bankruptcy).
This includes past-due accounts that have been turned over to a collection agency. These can include your credit accounts as well as accounts with doctors, hospitals, banks, retail stores, cable companies or mobile phone providers.
How can I improve my credit score?
There are some simple steps to help you keep your credit report healthy and improve your credit score:
Pay your loans and bills on time
Consider setting up direct debits and schedule loan repayments for your pay day.
Keep track of your credit commitments
Do your homework before applying for credit and keep track of your credit commitments. Making a number of applications within a short space of time will be recorded on your file and is not always looked upon positively by lenders, as it may be an indicator that you're in credit stress.
If you move house or update your contact details, notify lenders
Advise lenders, phone and utility providers of your new email or physical address so they can re-direct bills to your new address. If you don't pay these bills, a credit infringement or overdue debt could be listed on your credit report.
If you are having trouble meeting repayments
Talk to your credit provider who may assist.
Keep track of your credit record
Proactively manage your personal credit report by regularly checking your credit report. You can obtain a free credit report each year.
What do the different score bands mean?
The different Equifax Score bands help you to understand your level of risk, based on your Equifax Score, compared to the Australian credit-active population held by Equifax.
The Equifax Score bands are based on historical analysis that determines how likely an adverse event, such as a default, court judgement, personal insolvency or similar, is to be recorded on a credit report in the next 12 months. This a key determining factor in whether you are likely to be able to repay future credit.
|Excellent||833-1200||20%||An adverse event is highly unlikely to be recorded on a credit file in the next 12 months. In other words, the odds of no adverse events occurring on your credit file in the next 12 months are more than 5 times better than the average population odds|
|Very Good||726-832||20%-40%||It is unlikely an adverse event is to be recorded on a credit file in the next 12 months. In other words, the odds of no adverse events occurring on your credit file in the next 12 months are more than 2 times better than the average population odds|
|Good||622-725||40%-60%||Scores in this category indicate that an adverse event is less likely to be recorded on a credit file in the next 12 months. The odds of no adverse events occurring on your credit file in the next 12 months are better than the average population odds|
|Average||510-621||60%-80%||An adverse event is as likely to be recorded on a credit file in the next 12 months|
|Below average||0-509||80%-100%||An adverse event is more likely to be recorded on a credit file in the next 12 months|
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