Credit Report
Your credit report contains your credit history information. It is designed to give credit providers (such as banks, financial lenders, telcos and utility companies) access to your credit history to assess your suitability for a loan or credit contract.
Watch the KDM Credit Report video below for more information.
Accessing it
When exploring debt it is useful to discuss your credit history report. I say ‘your’ credit history report because that is exactly what it is. A company may hold the report and other companies may add to it, but at the end of the day you own it. It is because of this fact that your credit report, by law, must be made available to you free of charge. Credit report companies try to discourage you from accessing your report for free. They write in very small print that you are entitled to a free report and hide the information on how to obtain it. They also offer you your credit report instantly for a fee, but make you wait weeks and even months if you request your free report. However, it is your legal right to access your file for free, so try not to get discouraged by the credit report companies’ feeble attempts to make you pay for what’s yours.
What’s in it
Your credit report will likely contain information regarding any applications you’ve made for credit cards, personal loans, mortgages or store finance. It may also contain information regarding any mobile phone or utility contracts you’ve entered into. Your credit report will also contain some of your personal information including your full name, date of birth, driver’s license number, gender, residential addresses, and employer information.
In regards to your credit history, your credit report may also detail the types of credit you’ve obtained, the credit limit, and the dates your credit accounts were opened or closed. It may outline monthly repayments you’ve made on mortgages and credit cards and whether you paid all your financial commitments each month on time or not. The report may also detail your overdue debts and repayment defaults.
In addition, your credit report may include publicly available information such as court judgments and writs, details of any directorships or proprietorship in your name, as well as any debt agreement and/or personal insolvency/bankruptcy information.
Why get it
Whether you jump through the hoops set up by the credit reporting companies to obtain your free credit report, or you bite the bullet and shell out some cash for it, getting your credit report is worth the effort. Your credit report will give you valuable insight into how a lender may view your application. If you have a number of lender’s enquiries on your credit report, it may be worthwhile writing a letter to the bank in support of your application explaining the reason for each enquiry; perhaps you were refinancing your investment properties due to recent interest rate charges and applied to a number of banks for the one loan. By having an explanation for the notes that appear on your report, lenders may look upon your application more favourably.
If you have a writ and summons on your report, this may not signal the demise of your credit application. In this instance, you can contact the company that issued the writ and summons and have them remove it from your report once you have paid the outstanding balance which lead to the summons.
Another good reason for checking your credit report is that you may come across some activity that was not yours. Often this is due to a mistake by the credit reporting or credit issuing company. However, it may also be a sign of fraud. If you notice any erroneous credit history, you should contact the credit report company to have it investigated and the notes removed immediately.
In summary
In summary, all you need to remember about your credit report are four important things:
- Your report must be made available to you for free at your request. Just be prepared to jump through some hoops to get it;
- Applying for multiple loans at one time with the intention of only taking out one loan can have a negative effect on your report. Do your research and only apply for loans you intend to take;
- Some institutions will try to convince you to take out a small personal loan or credit card to ‘establish’ your credit history prior to taking out a mortgage. Whilst this can work, it has the same effect as applying for the card and not accepting the offer and you aren’t left with the burden of a credit card;
- Regularly check your credit report and be open with your banker when applying for a loan, you will be surprised how far a reasonable explanation can go.
Adviser’s Tip: Go to www.equifax.com.au/personal/products/equifax-credit-report for your free credit history report.