Getting regular credit checks and taking steps to improve your rating can be essential tools in your personal financial planning kit, as credit reports provide a strong indication of whether you’re worth the credit risk to lenders.
Understanding your credit score allows you to focus on what’s working for you and what isn’t so you can take the best steps towards improving your rating, especially if it’s currently in the red. Getting your credit score before a major purchase — a house, car, or business — will give you a better idea of where you stand. You can also use credit checks as often as you like to help ensure that your finances are on track.
What is in a credit report?
There are three major credit reporting bureaus in Australia: Equifax, Experian and illion.
Each has a unique report format that displays different information, but credit reports should generally include:
- Personal and public record information (name, date of birth, address, and employer).
- Consumer credit liability information.
- Any credit products you have.
- Repayment history for each product.
- Defaults and infringements.
- Credit applications and enquiries
- Credit report requests (number, frequency, and who else has seen the report).
- Commercial credit information.
How to get your free credit report
You’re eligible for a free credit report every three months from each of the three agencies, and since there may be some variation between them, there’s no harm in getting reports from more than one provider.
To request a free copy of your credit report, contact the credit reporting agency:
Reading your credit report
Before inspecting your report, you will be prompted to create an account to view it online or download it. You’ll then need to fill in your personal details and answer a couple of security questions, provide basic employment details, current and previous address, and 100 points of identification so keep your driver’s licence, passport, or Medicare card handy.
Once you’ve verified your identity, the credit agency reviews the submission, which can take up to five business days, though in most cases you can access your credit report online within a day or two. Again, avoid any provider that requires you to pay for the report and, of course, never provide your credit card details.
How to get your free credit score
There is no ‘universal’ credit score for each individual, and there may be discrepancies between agencies.
Equifax is the largest credit reporting bureau in Australia, followed by Experian, a close second. Equifax uses a 0–1,200 scoring range, while Experian uses a 0–1,000 range.
Both bureaus have slightly different scoring systems based on their algorithms and methods for calculating data, producing unique results. The scores might be similar or vary a lot; you might want to see how they compare and where and why they differ.
Choosing reputable credit score providers
The three largest bureaus provide the most reliable credit scores. There are other credit score websites out there offering free reports, but you need to be wary of what they’re offering. Most of these websites just connect to one of the three main reporting models anyway, so it’s best to go straight to the source. Outside the three agencies, reporting bodies may charge a fee for preparing your report.
Do your due diligence on privacy practices and how they’ll market your personal information. These third-party websites charge to monitor your score and any potential fraudulent activity. They may offer a greater frequency of reports (compared with the standard one per quarter provided by the bureaus).
Requesting a credit check through your bank
The big four banks all cite using Equifax, Experian, and Illion, and while your bank is a good place to obtain information, you should use one of the bureau websites to get your credit report.
Commonwealth Bank is unique among the big four in that it offers a free consumer initiative called Credit Savvy, which is designed to help Australians understand, improve, and protect their credit reputations.
Credit Savvy allows you to:
- Access your Experian credit score
- Learn about how to improve your score
- Explore the Learning Hub and education resources
- Compare credit products based on your score.
Seek help if there are ongoing issues with your score
By law, financial hardship information cannot be included in a credit report. If you’re struggling with financial issues and are worried about how this might affect your credit score, it’s important to reach out to your lenders.
Money problems can feel taboo to discuss at times, and as a society, we don’t often share our financial fears and frustrations, which only exacerbates the stigma. There are places you can go to for help with financial issues that might affect your credit score. Talk to your providers about the two options: temporary and permanent variations.
Developing strong money management skills will help you navigate challenging times and maintain your momentum, even if it takes months or years to achieve your financial goals.
You don’t need to suffer in silence, especially with money-related issues. There are support systems in place to empower your relationship with money. Invest in yourself now and change the trajectory of your life.