A Credit Report is a summary put together by a credit agency, outlining your track record of paying back money to lenders.

You’ll have a credit report if you’ve previously applied for any type of finance or even access to utilities, such as electricity, gas or an internet service.

Your credit report includes a detailed breakdown of your identity, including your name, date of birth, address and driver's license number.

Previously, your credit report only contained negative data, such as late repayments and defaults. Since 2014, the industry has changed, and now operates according to Comprehensive Credit Reporting (CCR).

Comprehensive Credit Reporting (CCR) has resulted in supplementary information being provided, which changes the way your repayment history is viewed. Now, when you make repayments on time or early, it counts towards your credit worthiness. All your credit information is now recorded and shared between banks and lenders, through the major reporting agencies.

The advantage of Comprehensive Credit Reporting (CCR) is that you can improve your credit standing, whereas in the past, this was difficult to do. However, if you have had a bad track record of paying debts and managing finances, this will be very clear in your credit report and it is likely to hinder your ability to get finance, or result in higher interest rates for you.

Your Comprehensive Credit Reporting (CCR) data contains details of:

• Each credit product you've held in the last two years
• Your repayment history
• Any history of default on any payments or bills
• The number of times you’ve applied for credit
• Any bankruptcies or debt agreements, court judgments or personal insolvency agreements

Each time an event that impacts your credit report takes place, a code is assigned. The codes are set out under the conditions of the Australian Credit Reporting Standards (ARCA) and are a quick way for lenders to scan your repayment history.

The scores are explained below:

0: Account paid on time
1: 0-29 days overdue
2: 30-50 days overdue
3: 60-89 days overdue
4: 90-119 days overdue
5: 120-149 days overdue
6: 150-179 days overdue
X: 180+ days overdue
C: ‘Account is closed’
A: ‘Not associated’
R: ‘Not reported’ – the bank or credit provider didn’t provide payment history for this period, which is the fault of the credit provider, and not necessarily you, as the account holder.
P: ‘Pending’ – purchases made with a credit or debit card that are pending (for up to 5 days) but have been deducted from your available funds, until the merchant finalizes the payment.
O: ‘Other’
T: ‘Transferred’ – a balance transfer of your debt with one lender to another, usually to save on interest repayments on a credit card or store card.

Under Comprehensive Credit Reporting (CCR), it is vital that you pay your bills and debts on time, as lenders can see very clearly how you manage money.

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What is a Credit Score?

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A simple way credit reporting agencies assess your creditworthiness is by using a credit score,

A credit score indicates how you’ve managed your debts in the past, and this serves to provide potential lenders with an indication of the type of borrower you are.

Credit scores typically range from zero to 1,000 or 1,200, depending on the agency that is compiling the rating.

Your credit score comprises:

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• the amount of money you’ve borrower
• the number of credit applications you’ve made
• whether you pay your bills and loan repayments on time

A lender will use your credit score to assess whether or not they should offer you finance. If you’re someone who has regularly defaulted on loan repayments, it might be difficult to obtain a loan from the major banks.

Finding out your credit score is free, and you can order a copy of your credit report from any of the various reporting agencies in Australia.

Experian 1300 783 684
illion 132 333
Equifax 138 332

If you’ve got a poor credit score, it is possible to improve it by changing the way you manage your debts.

The most effective ways to lift your credit score and keep it healthy are:

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• Pay off your debts if you are able to
• Always pay your bills the day you receive them
• Reduce your credit utilization to under 30%. Utilization is the amount of credit you're using compared to your credit limit. It is also possible to reduce utilization by increasing your credit limit
• Check to make sure your credit report doesn’t contain any errors
• Follow up with creditors in the event of a debt or repayment that has been incorrectly recorded
• Speak to a credit repair company if you feel your credit score is not reflective of your use of credit in the past.

Generally, any more than eight enquiries in a 12-month period is considered negative by a lender and hurts your credit score. Similarly, high levels of unsecured debt are likely to have a negative impact on your credit application with a lender.

The best way to maintain a healthy credit record is to refrain from applying for credit if you don’t need it.

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