Getting your credit report and credit score

By Vanessa Tripodi

We all know the importance of credit and cash flow to our lives. However, it is also important to remember that how we use our cash and credit cards can go a long way toward determining how smoothly our lives run. Your credit report and resulting credit score are used by banks, money lenders, credit card companies and even employers to form a picture of your spending habits and the way in which you handle responsibility. So, if you are on the verge of any sort of major life decision, it can pay to know what your creditors really think of you.

How are my credit reports kept?
Your credit reports are updated every time you apply for new credit. This means credit card applications and business, home and personal loan information is all used to form a picture of your financial situation. Also, in every Australian's credit reports is information about their payment habits. Late payment of your bills can show up on your credit reports, for example, and can affect your credit score. Your credit reports don't just show information about your personal spending and debts, but also any joint loans you have taken out with life or business partners, too.

How is my credit score calculated?
Your credit score is derived from a computer calculation of your credit reports, saving lenders the time to read the whole document. The average credit score is 750. A lender will look at how your credit score compares to the average to determine how risky it is for them to lend you money. It is also possible for Australians to have more than one credit score as your first score would have been calculated on the approval of your first credit card or loan. However, additional credit scores can be calculated by lenders when they review your credit report.

It may surprise many Australians to learn that their credit rating can also be affected by less tangible factors such as their postcode. Sometimes credit scores are calculated on the payment history of all residents within a postal area. You can go to CheckMyFile.com.au to see how the incomes of your neighbours can affect your credit rating.

Why should I care about my credit reports?
You may have been declined credit and are unclear about why, or perhaps you just want to know what to expect when you seek a car or home loan. Many businesses will also check on your credit rating before taking you on as a customer, and even employers will peruse your credit history to gauge how you handle responsibility. This is why it is important to be able to have prompt and reliable access to an up-to-date report of your credit history.

Where can I get my report and score?
At CheckMyFile.com.au, you can request a free copy of the credit reports and credit scores held by Dun & Bradstreet and Veda. You will also have your credit scores rated on a scale of 1 to 5 stars. You only have to supply your personal details, marital status, address and residential details, bank account details and credit card details for a copy of your report.

When providing such detailed personal information, always make sure you are using an accredited credit agency to conduct your credit check. Beware of companies that promise to improve your credit score for a fee, and fraudulent credit reporting companies that offer free credit reports and then steal your personal information. The only way to ensure a healthy credit report and a good credit score is to pay your bills on time, use your credit cards responsibly, and regularly check your report for discrepancies or fraudulent usage.

Article by Vanessa Tripodi

Published: June 29, 2009