Leslie Massey
Credit scores are important as they are used by lenders such as banks, credit card companies, utilities, and telcos to decide how much they will lend you and may impact the interest rate you’re offered. In Australia, there are three credit reporting bodies: Experian, Equifax, and illion. You can access your credit score and credit report for free from these credit reporting bodies. Each of the three credit reporting bodies has its own credit score algorithm, which interprets the information held in a credit report and calculates your credit score from that data. Your credit score is calculated based on personal and financial information about you that is kept in your credit report.
| Characteristics | Values |
|---|---|
| Credit score providers | CreditSmart, CommBank, Equifax, Experian, illion |
| Credit score range | Between 0 and 1,000 or 1,200 |
| Credit score frequency | Once every 3 months |
| Credit score cost | Free |
| Credit score calculation | Based on personal and financial information in the credit report |
| Credit score impact | Helps lenders decide how much to lend and the interest rate offered |
| Credit score improvement | Pay off debt, fix incorrect information in the report |
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What You'll Learn
How to access your credit report
In Australia, there are three credit reporting bodies: Experian, Equifax, and illion. Each credit reporting body must give you access to your consumer credit report for free once every three months. You can request a copy of your credit report from each of these credit reporting bodies, as they may hold different information about you.
You can access your credit score and credit report for free through illion Credit Check. It takes a few minutes to sign up, and your data is encrypted using industry best practices. Accessing your credit score through illion Credit Check will not affect your credit score. After you sign up, you will see your score and details of your credit report so that you have a better understanding of how financial institutions and other credit providers see you.
Credit Savvy, powered by CommBank, also gives you access to your Experian credit score and other credit-related information held by Experian Australia Credit Services Pty Ltd. By using this service, you appoint Credit Savvy as your access seeker to assist you in obtaining access to your Experian credit score and other credit information held by Experian about you. This information is then delivered to you in the CommBank app. You will need to sign up via the CommBank app but do not need to hold a CommBank financial product to access the service. You must be 18 years of age or older and a CommBank customer to use this service.
If you have a ban in place with Experian, Credit Savvy’s service won’t be able to access your credit report. A ban initially lasts for 21 days and is free to request and extend.
If there is incorrect information on your credit report, you should first contact the organisation that provided it. If they don't resolve the issue, you can also contact Experian and ask them to fix it. This is a free service. Some companies may try to charge you to get all negative information removed from your credit report. The only thing they can ask the credit reporting agency to remove is wrong information, and you can do that yourself for free.
If you think you have been a victim of identity theft, contact the police and credit providers’ fraud department so they can investigate this for you.
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How to understand your credit score
Your credit score is an important number that can impact your financial opportunities. It is calculated by credit reporting agencies, such as Experian, Equifax and illion, using data from your credit report. Lenders, such as banks and credit card companies, will use your credit score to decide how much to lend to you and at what interest rate. A higher score generally indicates a greater likelihood of your request for credit being accepted.
Credit reporting agencies use different scoring methods, with scores typically ranging from zero to 1,000 or 1,200. Your credit score is influenced by a range of factors, including your debt, loans, court judgments, bankruptcies, and repayment history. You can access your credit score and credit report for free from credit reporting bodies. In Australia, you are entitled to a free copy of your credit report from each of the three major credit reporting bodies once every three months.
To understand your credit score, you should be aware of the ''band'' it falls into, such as low, fair, good, very good, or excellent. This band indicates your creditworthiness relative to other borrowers. A higher band indicates a stronger credit position and can lead to advantages such as savings on interest rates and better terms on credit products.
It is important to regularly review your credit score and report to ensure accuracy. If you identify any incorrect or out-of-date information, you can contact the relevant credit reporting agency to have it corrected. Additionally, if you believe you have been a victim of identity theft, you should contact the police and credit providers' fraud departments to investigate.
By understanding your credit score and taking proactive steps to manage it, you can make more informed financial decisions and improve your overall financial health.
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How to fix errors in your credit report
It is important to regularly check your credit report for errors, as these can adversely impact your ability to get loans, new lines of credit, or better lending terms and interest rates. You can access your credit score and credit report for free. In Australia, there are three Credit Reporting Bodies: Experian, Equifax, and illion. You can request a free copy of your credit report from each of these bodies.
If you find an error in your credit report, you should first contact the organisation that provided the information to the credit bureau. If they do not resolve the issue, you can contact the credit reporting body and ask them to fix it. This is a free service. It is a good idea to provide them with any documents or information that shows an error has been made. The credit reporting body must respond to you within 30 days, unless you agree to extend that period.
If you are still unhappy, you can ask the credit reporting body's External Dispute Resolution ('EDR') service to look into it. These are independent bodies that handle complaints. If you are still not satisfied, you can complain to the Office of the Australian Information Commissioner, the independent government agency responsible for overseeing credit reporting.
You may see advertisements from credit repair companies offering to fix errors on your credit report. You do not need to pay for this service, as you can do it yourself for free. Only deal with a licensed credit repair company, which you can check on ASIC's website.
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How to improve your credit score
To improve your credit score, you must first understand how it is calculated. Credit score providers use data from one or more credit reporting agencies to calculate your score. There are three credit reporting bodies in Australia: Experian, Equifax, and illion. Each of these bodies has its own credit score algorithm, which interprets the information in your credit report to calculate your score.
Your credit score is a measure of your debt and credit history. It is based on your credit report, which includes personal and financial information about you. This information includes your history of borrowing and whether you've made repayments on time. A higher credit score indicates lower risk, making it more likely that you will be approved for loans and credit products with favourable terms and interest rates.
- Check your credit report for errors: Obtain a copy of your credit report and check it for any inconsistencies or errors. If you find any issues, contact the reporting agency to investigate and rectify them.
- Clear any judgments against you: If there are any judgments made against you, work on getting them removed with the approval of the creditor or by applying to a court.
- Make timely payments: Ensure that you make consistent and punctual payments on any loans, credit cards, and utility and telco bills. Set up automatic payments to help you stay on top of your bills.
- Reduce the number of credit applications: Multiple credit applications within a short period may be seen as a red flag by lenders. Focus on making timely payments and improving your financial habits instead of applying for new credit products.
- Seek financial assistance: If you are struggling to manage your repayments or bills, reach out to your credit provider, service provider, or a financial counsellor for assistance. They can help you develop a budget, negotiate with creditors, or explore financial hardship arrangements.
Improving your credit score requires discipline and the development of good financial habits. By following these steps and maintaining healthy financial practices, you can work towards increasing your credit score over time.
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What to do if you've been denied credit
In Australia, credit scores are calculated based on the information in your credit report. Credit scores can impact the interest rate offered by lenders and may influence their decision on how much to lend.
If you have been denied credit, it is recommended that you do not apply for credit again until you find out why. Every time you apply for credit and are declined, it is recorded in your credit report, and applying for credit again immediately after a rejection may imply desperation. It is usually a good idea to wait at least six months before applying again.
You are entitled to obtain a free credit report within 90 days of being denied credit. You can request a copy of your credit report from one of the three credit reporting bodies in Australia: Experian, Equifax, and illion. Reviewing your credit report can help you understand why your application was denied and what you can do to improve your credit score.
Your credit report may contain errors or outdated information, which you can request to be fixed for free. You can contact the credit reporting body directly to correct any inaccurate information.
If your circumstances have changed recently, you may need to update your information. You can provide additional documentation to the lender to rectify this issue.
If you are struggling with debt or loan repayments, you can talk to your lender or provider about a financial hardship arrangement. This may involve temporarily deferring a payment or permanently varying a loan.
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