While it’s common knowledge that lenders will look at an individual’s credit report when an individual is applying for a home loan, less people are aware of the type of information their credit report actually contains, or some of its other uses.
According to CreditSmart’s Geri Cremin, “If you are applying for a credit card, a personal loan or even applying to change your mobile phone provider, your credit report can make or break your application.”
She explained that a credit report is “a snapshot of your credit history and current credit health – so lenders do look at your credit report, and you should too”.
“Your credit report is a way for lenders to see how you handle the credit you currently have and assess whether the credit you’re applying for is right for you,” Ms Cremin said.
“Better still, a good credit report might open the door to better deals,” she continued.
By law, your credit report can only be accessed by others in limited circumstances.
“For example, your credit report can’t be accessed by a real estate agent when you apply to rent a house, an insurer when you apply for car or home insurance or by a potential employer when you apply for a job,” she outlined.
According to the spokeswoman, “lenders look to your credit health to determine your attractiveness as a customer, so it is important to know where your credit health stands”.
As a result, Ms Cremin said it’s important to take charge of your individual credit health.
She highlighted that a great first step is to check your credit report to “understand what’s on it and get on top of your monthly repayments”.
What information does my credit report contain?
At a minimum, a credit report will include identifying information, such as your name, birth date, address and employment history.
CreditSmart has flagged that more importantly, a credit report will also include the following:
- A list of any applications you’ve made for credit over the last five years, regardless of whether an application was approved or not. This information is marked as an “enquiry” by the credit provider you applied to and includes the type of credit applied for.
- A breakdown of current credit accounts, such as a home loan or credit card.
- Up to 24 months of repayment history to show your monthly repayment behaviour on financial credit accounts. According to CreditSmart, phone and utility companies don’t report on repayments, so this won’t be included on your report.
- Any defaults listed by a credit provider on financial loans, as well as telco and utility accounts.
CreditSmart has noted that defaults can occur where a person has missed a payment of at least $150 by at least 60 days, with these defaults staying on a credit report for the next five years.
As a result, Ms Cremin has recommended checking your credit report annually.
“Really treat it as an asset that will help you access the right credit if and when you need it,” she concluded.