EXAMPLE: YOUR EQUIFAX SCORE
Equifax (formerly Veda) is an organisation that provides credit ratings and if you have a credit report with Equifax, is it likely that you will have an Equifax Score too. It is a number between 0-1200 that summarises the information on your credit report at a point in time. If you’ve ever looked at your credit report, you’ll know it can contain lots of information that can sometimes be difficult to understand (view a sample report here). Your Equifax Score can help you understand the information in your credit report and how it affects your ability to get a loan and at the best rate.
With your Equifax Score, not only do you find out your credit rating, but you’ll also learn what information on your credit report is contributing to your credit rating, good and bad. This information, called ‘contributing factors’, can help you understand what you can do to improve your Equifax Score credit rating. Your Equifax Score is important to know as it is what lenders can look at when deciding whether to accept your application for a loan or credit. In simple terms, the higher your Equifax Score, the better your credit profile and the more likely you are to be accepted for credit.
WHAT IS YOUR CREDIT REPORT?
Your credit report contains information relating to your credit history and it helps credit providers, such as banks, financial lenders, telco and utility companies, understand your credit worthiness when you make an application for a loan or credit contract.If you’ve ever applied for a credit card, personal or home loan, store finance, mobile phone or an electricity or gas contract, the organisations that provide these services will both access (for the purpose of assessment) and impact your credit report (if you go into default on your payments).A credit report includes information such as:
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Personal details including your full name, date of birth, driver's licence, gender and residential addresses and employer information.
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Consumer credit information which may include:
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Credit applications you have made for personal use,
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Credit account information including type of credit account, the credit limit and the dates accounts were opened or closed,
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Monthly repayment history on credit accounts such as mortgages and credit cards. This will reflect whether you paid the minimum amount required on your financial commitments each month on time or not,
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Details of overdue debts like payment defaults.
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Publicly available informationcan also be included as part of your consumer credit information. This includes court judgements and court writs, directorship details, proprietorship details and bankruptcy, debt agreement and personal insolvency information.
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Commercial credit information which may include:
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Credit applications for credit for commercial purposes,
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Details of overdue commercial credit accounts.
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Your credit report does not include information about your repayments of utility bills (electricity, water or gas) or phone bills (home, mobile and internet)
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Commercial credit applications - Since March 2014, credit reports list any commercial or business loans you have applied for.
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Report requests - Which credit providers have requested copies of your credit report.
HOW YOUR PAYMENT DEFAULTS ARE REPORTED
If you miss, or don't make payment on a debt, your credit provider may refer your debt to a debt collector and/or report your debt to a credit reporting agency and ask them to record the default on your credit report.
A credit provider may only report your debt if:
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The default amount is $150 or more.
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You're a 'confirmed missing debtor' or 'clearout' which means your creditor can't contact you, or
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60 days or more have passed since the due date for payment, and
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The creditor has asked you to pay the debt either in person (for example by phone call) or in writing (sending a written notice to your last known address).
The credit provider must notify you that they may lodge a report about the overdue payment, before they do so. Usually, your credit contract or service agreement will explain when your creditor may make a report about you to a credit reporting agency.
HOW LONG WILL DEFAULTS REMAIN ON YOUR CREDIT FILE?
A credit default listing remains on your report for 5 years (in the case of a clearout it remains for 7 years). If you pay the debt, the listing stays but your credit report will be updated to show you have made payments.
When you apply for credit down the track, for example for a home loan or business loan, you may be rejected on the basis that there is a default listed on your credit report. Credit providers must tell you if your application has been rejected because of something in your credit report.
WHY IS IT IMPORTANT TO KNOW (AND MONITOR) YOUR CREDIT RATING / REPORT
ASIC’s Credit Report Fact Sheet outlines the reasons why it’s important to stay on top of your credit rating. First and foremost, your credit rating and report forms the foundation of your financial (and thus personal) wellbeing, influencing your capacity to build a secure financial future.
Additionally, it is good to be fully aware of your rating and the additions made to your report on a regular basis because sometimes credit ratings agencies get things wrong. It’s also crucial to ensure that there is no identity theft happening, in which other people use your personal information for their own financial gain.
In a digital world, identity theft is a serious issue, one that impacts growing numbers of individuals every year. ASIC recommends that you check your credit report on an annual basis.
WANT A COPY OF YOUR CREDIT REPORT?
You can get a copy of your credit report within minutes by purchasing a package from an organisation like Equifax. Or you can obtain a free credit report, despatched to you within ten days. The free service provides a credit report only and does not include your Equifax Score or Equifax Score contributing factors which summarise the major items impacting your credit rating.There are certain circumstances under which you can get a copy of your credit report for free.
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You can request a copy where a credit application was declined. You must apply within 90 days of the date you were declined.
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You can request a copy if you have lodged a correction request and been advised that information on your file has been corrected.
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You can request a copy once every 12 months.
If you request a free copy of your credit report because you have been declined for credit, you might be asked to supply a copy of this decline notice with your application.
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