Lenders request credit reports and credit files every time you apply for a loan or credit card.
It is important to understand everything you can about your credit report so you can make sure that it always stays in great shape.
Frequently asked questions about credit reports and files
Here are some of the most commonly asked questions about credit reports and files and the answers to them.
What are credit files and reports?
A credit file is a list of all your credit information that is kept on file at a credit bureau. A credit report is this list that is sent out to anyone that requests it. You can request a credit report on your behalf to see what’s happening in your file or one of your lenders may ask for it any time you apply for credit.
Public, identity and credit information are all made available in this report and it is used to assess your credit worthiness. Information that may be reported on your file include the following.
- The types of credit you have applied for including credit cards, home loans, interest-free and overdrafts.
- How much credit you have applied for.
- Where you have made an application for credit including financial companies, banks, and utility and mobile phone companies.
- Date account opened
- Current account limit
- Nature of credit account
- Date account closed
- Account payment history
What else is on the credit file?
Here is some of the other information that will be included on your file.
- Personal information such as your driver’s license number, address, name, and date of birth.
- Any information that is public record such as proprietorships and directorships.
- Any inquiries you have made for credit in the last five years.
- Information about bankruptcy.
- Defaults against your name.
- Information about your credit accounts that are current.
Who has a credit file?
Only people that have had active credit within the past seven years have an open credit file.
How is a credit file started?
When you make your first application for credit, the lender will provide information and this starts the file. It can also open if the credit bureau receives information from public authorities for proprietorships, directorships, a default judgment, or a bankruptcy action. A lender includes the following information that is directly entered into a database.
- Your name
- Your sex.
- The number on your drivers license.
- Your date of birth.
- How much credit is requested.
- The credit type you are applying for.
- Your previous and current addresses.
Every time you apply for new credit, your file will be updated with current details on your application including any changes to your address.
Will I be able to understand my credit file easily?
Yes. If you request a copy of your credit report it will be very simple to understand.
Should I request a copy of my credit report?
Yes, it is very important that you have an up-to-date copy of your credit file for the following reasons.
- You should be aware of all the information that is included in your file since your reputation is on the line. You should know exactly what your credit report is saying about you to your lenders.
- Credit providers, retailers, and banks rely on all the information included in your file when they decide whether you are worthy of credit or not.
- You may become a victim of credit fraud without knowing it if you do not regularly check your credit file. You may not find out that your identity has been compromised unless you request your report on a regular basis.
Why was my application for credit declined?
A credit provider may decline your application for a variety of reasons. Once you have a copy of your credit file, you should look through it for any of the following black marks that can influence your credit application.
- There are defaults on the file that you have forgotten.
- Your identity has been compromised and someone has been fraudulently using your information to get credit and have subsequently defaulted on payments.
- There is incorrect information on your file.
What is a default?
A default, also know as an overdue account, is a debt of more than $100 that has not been paid and is now overdue by at least 60 days. Accounts with utility and telecommunication companies only need to be more than $20 in arrears to be reported. These act as a black mark on your credit report and potential lenders do not like to see an applicant who has a lot of defaults showing.
A default can only show up on your credit file if steps have been put in place to get the debt paid either in full or partially. The borrower must have received a request in writing or in person to pay the amount that is outstanding. When the amount has been paid in full, the lender is legally obligated to make an amendment to the credit file showing that the default has been paid.
Any defaults will remain on the file for five years unless it has been reported by error and is disputed. This is one of the reasons why it is so important to look at your credit report every once in a while. You can request an investigation for any errors you see listed so that your report stays healthy and clean at all times.
Is it possible to remove an overdue account that is listed on my file?
It is possible to get any listings removed if they were recorded in error or incorrectly. You can contact the lender directly or you may want to work through a credit service to make sure that the listing is lifted. There are agencies that can work on your behalf to contact the credit bureaus and provide the information needed to prove that an error was made or that identity fraud took place.
Once I have paid off my defaults what happens to the record of them on the credit file?
The lender has to make an adjustment to your credit file to indicate that the amount has been paid. This record will stay on your file for five years so it is important to always make your payments on time to avoid having any defaults show up when you make an application for a loan.
What is the difference between a default and a clearout?
While a default or an overdue account refers to a debt that has not been paid for 60 days and the client has been notified, a clear-out refers to a confirmed missing debtor. The conditions for a clear-out are as follows.
- The lender must have made efforts in a reasonable manner to get in contact with the guarantor either in writing or in person.
- If no contact can be made, the lender does not have to wait for the debt to be more than 60 days overdue for the listing to be added to the file. It can be immediately reported.
The debt will remain on the file for an entire seven years from the first day it was listed.
What does the term “current” mean?
Once you have brought an overdue payment back up to date, the listing status will change to current. This means that even though you still may have an outstanding balance, the payments have been brought up to date.
How do I deal with overdue accounts?
If you see that you have a default listed on your credit file and it has already been paid, you’ll need to make sure that it gets updated. You can simply contact the lender and ask him to update the information as soon as possible.
If there is a listing on your file that you do not recognise that all, contact the provider and state the reference number of the default during your conversation. They’ll be able to launch an investigation for you. In some cases, you’ll see a listing from a company that you’re sure you have never dealt with before and this is quite a concern. It is an indication of fraud and you may also have to make this a police matter.
How do I dispute an overdue account?
The first thing you can do is fill out the form provided with your credit report called the File Update Form. While the matter is being resolved, the listing will have “disputed” marked on it.
What types of public record data can be recorded on my file?
Here are some examples of information recorded on public record that may be contained in your file.
- Information about Directorship that has been received from the Australian Securities and Investment Commission.
- Writ/summons and information about judgments from various Australia courts.
- Information that can be taken according to the Insolvency and Trustee Service Australia regarding a bankruptcy.
What is a credit score?
A credit score or a credit rating is a score given by lenders that assesses how much risk will be involved if you are given credit. This rating is given by each individual lender so is somewhat arbitrary. One lender may offer you credit, whereas another will give you a lower score and decide to decline your application.
The score is based on the credit information on your file and the details provided on your application form. It may be the details on your application, the information in your credit file, or a combination of both that determines whether a lender will give you credit or not.
How soon will my file be updated?
The timing on the updates can really vary. If a lender has updated a listing on your file, it will take a maximum of five business days for the update to be recorded. It may be processed more quickly than that depending on which method was used to notify the credit bureau.
In order to get your file updated, you will need to contact the agency in writing that you registered with. You should also provide any proof you have that the payment was made. Once your request has been received, the agency can verify and update your file for you.
The agency has up to 30 days to make the update, but in most cases, it will happen much faster than that.
How long does information stay on my file?
- If you have had a clear-out, it will stay on record for seven years. If it was on the list before January 31, 2000, it will remain there for five years.
- Information about bankruptcy will remain on the file for seven years as well. This information was previously only held for five years before January 1998.
- Any applications for credit, overdue accounts and inquiries will remain on the credit file for five years.
- Every month, the agency will scan your files and purge any outdated information. This keeps all of the data accurate at all times.
- Judgments that have been made in court remain on the file for five years.
- Any of your personal information including names for cross reference, drivers license number, address history, sex, date of birth, and names stay on the file for life. This distinguishes your information from all the other files in the database.
- Purging occurs according to any limits set by the Privacy Act of 1988.
- Any WA and Queensland Summons and Writs remain on the file for two years and on business/company files for four year.
It is important to note that even if you have completely paid off a clearout or overdue account, it will remain on your file for the specified amount of time. It is always wise to avoid overdue accounts since they remain on file and affect your credit history.
Will all lenders check my credit file when I apply for credit?
These days pretty much all lenders check the credit file before approving any loans. There is really no other way to assess credit worthiness other than by using your credit history. It is a direct reflection of how you handle money and how responsible you are with debt.
How can I prevent credit fraud from happening to me?
Here are some easy rules to follow when it comes to banking and handling your credit card to help prevent fraud from occurring.
- Never write down your personal identification number. If it falls into the wrong hands, it can be very destructive. Simply memorise it, since it will be something you’ll need to remember often. If you feel that you won’t be able to remember it, and have to write it down, be sure to keep it somewhere safe.Don’t put it in your wallet and don’t let anyone else know where you hide it.
- Don’t let anyone else know what your personal identification number is.
- Always keep your personal identification and cards in a place that is secure./li>
- As soon as you receive a credit card make sure you sign it as soon as you can.
- Any paperwork that contains details about an account or personal details needs to be shredded before it is discarded.
- If you have a credit card or debit card that has been stolen or lost, you must report it immediately to your bank or financial institution.
How do I handle credit fraud?
Identity theft is a crime and must be treated as such. If you feel that somebody else has been using the details of your identity fraudulently, you need to do the following.
- Report the crime to the police.
- Get in touch with the company that has provided the credit and let them know about any activity you believe has been fraudulent. If you fail to inform them of the details, you can be held responsible for the debts.
- Get a hold of a copy of your file to make sure that it has been compromised.
Identity fraud is a serious situation and you must treat it this way. Every conversation that you have with your lender, the police or any other agency should be noted. You should also take notes during any conversations so that you can provide the details about what was said if you are asked later.
Don’t be afraid to ask questions about the process. This is your reputation and financial future that has been compromised and you have every right to slow down the conversation, find out what any words mean and ask questions. Most people that you deal with on these issues will try their hardest to help you out since they understand the seriousness of the situation and have dealt with many other people that have also been victimised.
Who is allowed access to my file?
If you have applied for credit from a lender or from a company where the payment on services or goods is deferred by at least seven days, the lender or company can have access to your credit file. They cannot, however, get access to it without getting your permission first.
Knowing everything you possibly can about your credit file puts you in the position where you can better prevent credit fraud and keep your credit history healthy. A lot of people don’t fully understand how credit files work and run into trouble with them simply by not being informed.