Understanding your Credit File
Posted August 20th, 2009 and last modified November 2nd, 2011Table of Contents: Guide to Credit Rating, Credit Limit & Credit Repair
- What Exactly Is A Credit File?
- Not everyone has a credit file
- What information is found in your credit report?
- How does a credit file get started?
- Is it beneficial for me to have a copy of my credit file?
- Why would I be declined credit?
- Dealing With Problems found in your Credit Report
- How long do I wait for updates?
- What is a credit score / credit rating?
- What Length Of Time Does Information Remain On The Credit File?
- Incorrect Information
- Credit File Glossary & Terminology
- Credit Fraud
- Credit Applications
What Exactly Is A Credit File?
You have probably heard people talk about ‘credit files’ and wondered what they are exactly. Simply put it is a file that contains information about a person who has actively had credit in one form or another in the last 7 years. The credit may be by way of accounts with electricity companies, telephone companies, credit card companies or home loans. If you access your credit file and want a copy it is called a ‘credit report’.
Order a copy of your credit file
Receive email alerts whenever specific changes occur on your credit file for 12 months. You also receive a copy of your credit file despatched within one working day..
Receive your credit file with information on:
- Details of consumer credit enquiries
- Details of overdue consumer credit accounts
- Commercial credit enquiries
- Details of overdue commercial credit accounts
- Bankruptcy & Court Judgements
- Writs & Summons
- Information on your current relationship with a credit provider
Not everyone has a credit file
Unless you have had your name on a similar type of account or loan as mentioned above, in the last 7 years you will not have a credit file.
What information is found in your credit report?
As the name would suggest, the information on a credit file would be about your credit history, in other words, a listing of your credit standing with various companies. You would expect to find the following information on a credit file or credit report:
- File Identity: your name, residential address, date of birth, drivers licence
- Credit card records
- Credit card applications
- Default notices
- Any listings of overdue accounts (not everyone lists an overdue account unless it is more than 90 days although it could be listed at 60 days)
- Bankruptcy information
- Judgements
- Public record information relating to business ownership or directorships
Click here to view a sample credit report
How does a credit file get started?
A credit file starts when you first make application for credit from sources similar to those listed above or if information is received from public authorities regarding business ownerships, Directorships, defaults or Judgments.
A credit provider seeking credit information about you would be enquiring about you by name, so if you were not already listed a new file would be started and the following information would be put on file:
- Name
- Address, present and past
- Sex
- Date of birth
- Drivers licence number
- Type of credit applied for
- Amount of credit requested
The credit file is then active and when another credit provider has information they will update your file with their relevant details, e.g. a credit card application or change of address.
Is it beneficial for me to have a copy of my credit file?
Yes, there are times when having a copy of your own credit file would be beneficial. There are several basic reasons as to why:
- Credit fraud is a major concern and if you have a copy of your file you will know if someone has been accessing your details
- Banks, other credit providers and retailers rely on your file when deciding whether to lend you money or not
- It is advisable to know your credit standing when you are looking at borrowing, say for a house or even a credit card
Would I understand a credit file?
Yes, you would. They are not complicated, more a list of details.
Why would I be declined credit?
It is the credit provider you have approached that would decline your credit. If you have been declined credit the first step would be to look at your credit file and see that it is all current and correct. In looking at your credit file it would pay to look to see:
- If there are they any overdue accounts that you have forgotten about (defaults)
- That your details are all correct
- That no-one has been using your identity to obtain credit fraudulently and has defaulted on payments – these could be phone accounts, credit cards or anywhere that someone may have used your details to obtain credit
Dealing With Problems found in your Credit Report
Incorrect Personal Information
If any of your identity information is incorrect, all that is required is that you fill out and return the File Update Form included with your credit file. Check at a later stage that the details have been updated.
Overdue accounts (defaults)
If you have an Overdue Account (Default) listed on your file, but one that has been paid and not updated, contact the credit provider listed and ask them to rectify the listing
If you find a listing on your file of an Overdue Account (Default) and it is not yours, contact your credit provider, give them your file number and ask them to substantiate the listing. (You may have forgotten to pay something, but at least they can check that for you.)
Overdue account disputes
Sometimes the situation arises where you have a dispute with a provider and the account has been listed on your credit file as an Overdue Account (Default). In this case you would want the entry to be marked ‘dispute’ until the matter is resolved, so to do this return the File Update Form provided with your Credit File to an investigations department. Make sure that you detail all the information regarding the dispute, on the form.
Incorrect Public Record Information
If you find incorrect information on your credit file that has been lodged from a Public Record source you will need to contact them and get it changed. To do this you will need to fill out the File Update Form with all the relevant details and lodge it with the correct department who would have handled the issue. Your file then should be updated within 30 days.
Public Record information could have come from the following sources:
- Any of the Courts around Australia may have lodged a Judgement or Writ/Summons
- Insolvency and Trustee Service Australia (ITSA) may have listed information about Bankruptcy/Part X/Part IX
- Australian Securities and Investment Commission (ASIC) may have lodge information regarding a Directorship
How long do I wait for updates?
This will depend on the information being updated. It could take anywhere from 5 to 30 days. If you contacted a credit provider that needed to change details (say an account that has been paid) it would more than likely be updated within 5 days of the details being received by the agency. Legislation says information must be updated within 30 days. Always make all your requests in writing and keep copies for yourself. If you are requesting updates referring to payments etc., send copies of proof of payment.
What is a credit score / credit rating?
This is a system that some credit providers use as a means of assessing a person’s risk. The score or rating builds according to the information that you have or can provide on your credit application and also from the information held on your credit file.
Your credit score or rating can then be calculated on the information on the application or in conjunction with the credit file. This will depend on the method used by the particular credit provider you are dealing with.
Each provider has its own criteria that must be met and applies their own score/rating and then will approve or decline an application.
What Length Of Time Does Information Remain On The Credit File?
Credit files are an ongoing process. Information is kept on file for a number of years. Listed are the various times involved:
- Identity information is a constant. This gets updated by you or by credit providers as their information comes to hand
- Credit applications, enquiries and overdue accounts are held on your file for 5 years
- Bankruptcy/Part X/Part IX is held for 7 years
- Clearout information is held for 7 years even if problem resolved and brought up to date
- Overdue account listings remain on file for 5 years from the date of listing, regardless of the fact that they have been paid
- Writes & Summons in Queensland and WA are held on a company/business file for 4 years and on an individual’s file for 2 years
- Files are purged each month and out of date information is automatically removed to ensure accurate files. Purge dates are calculated on the date the information was added to the file and the time limits vary according to the Privacy Act 1988
Incorrect Information
When checking your credit file you may find that there are entries that are not correct.
Overdue Account (Default) details
If you have paid an Overdue Account and it has not shown up on the credit file yet, contact the credit provider concerned and ask them to look into the matter. The file should be updated within 5 days of receiving information from the credit provider.
Should there be an Overdue Account listed on your credit file that is not yours, contact the credit provider and ask them to look into it. You will need to give them a reference number.
Remember in each case it is best to do this in writing as well as a phone call.
Public Record Information
If there is any information of a public nature that is not yours in your credit file you will need to contact the department concerned. This could be in relation to any of the following matters:
- Any of the Courts around Australia may have lodged a Judgement or Writ/Summons
- Insolvency and Trustee Service Australia (ITSA) may have listed information about Bankruptcy/Part X/Part IX
- Australian Securities and Investment Commission (ASIC) may have lodge information regarding a Directorship
Credit File Glossary & Terminology
- Overdue Account (Default) – usually an account is considered an Overdue Account (Default) when the total is in excess of $100 and is 60 days overdue. Utilities and telephone accounts may be recorded when over $20. To be listed as an Overdue Account (Default) the creditor must have taken steps to recover all or part of the account, either in writing or in person.
When the account is paid or brought up to date the credit provider must, by law, amend the credit file to show that the overdue amount has been paid. Overdue Accounts (Default) of yours, even when fully paid, will remain on the credit file as a listing for 5 years.
When you make future applications for credit, the credit provider can view your overdue accounts on the credit history.
- Clearout – This term is used where there is a confirmed ‘missing debtor’. A credit provider must have made a substantial effort to get hold of the debtor in person or in writing. When they cannot get hold of them, then these accounts can be listed on the credit file immediately without waiting the normal 60 days. These debts will remain on the file for a full 7 years from the date of listing.
- Current – If you have had an Overdue Account and it has been paid, the credit provider may list you as ‘current’. This means that you have paid your overdue debt but you have still remained a current customer of the credit provider.
Credit Fraud
Credit fraud is most commonly ‘the stealing of another person’s identity’. In other words your personal details are used by someone else to obtain credit. The risk here then is if they run a debt, you then become responsible for it. It is then up to you to prove that it is not your debt and if you cannot and also cannot pay it, you are the person that will end up with the bad credit reputation.
What should I do if I feel I am the victim of credit fraud?
Credit fraud is considered a serious crime. If you believe that your credit file has information on it that does not belong to you there are steps you should take to rectify the problem immediately:
- Obtain a copy of your credit report
- Contact the police and report this as a crime
- Contact the credit providers and advise them that your identity has been used fraudulently because you could be held responsible for any debt involved. When talking to the credit providers ask them what their system is for dealing with these issues as each provider will handle things in a different way
Make notes of all conversations held with anyone involving the matter. In fact, a good way is to have the conversation then email a letter to the person concerned reconfirming your conversation. This has two purposes:
- It puts the details of your conversation on paper
- It gives the other person a chance to clarify any issues that may have been misunderstood
Is it possible to protect myself against credit fraud?
Governments and banks are very aware that credit fraud is a major problem and systems have been set up to help the individual reduce the risks of credit fraud. Follow these guidelines and you will be acting in your best interest:
- When you receive a new credit or debit card, sign it immediately
- Keep all your cards and personals ID’s in a safe place
- Shred paperwork that may have your personal or financial details on
- If you keep your pin number on paper, keep it separate from your card
- Never send your personal details through the internet
- If using the internet, make sure you are using a secured site (that is one that is encrypted and will show a lock at the end of the browser address bar)
Credit Applications
Not all credit providers check the credit files. This may depend on several things, but in general you should expect that a credit provider who is providing credit or who is giving you deferred payment, will check your credit file. It is reasonable to expect that a credit provider will want to know if you have a good credit history before providing you with a service. After all, they will want payment for that service and your credit file will let them know if there is a credit risk involved.
Credit providers can only access your credit file if you have made an application for credit or for goods and services on a deferred payment, that will be longer than 7 days. At no other time should credit providers be accessing your credit file.
Check out today's featured offers:
| Westpac Low Rate | Citibank Clear Platinum | Qantas AMEX Discovery | ANZ Platinum |
 |
 |
 |
 |
0% p.a. for 6 months on purchases & balance transfers |
2.9% p.a. for 12 months |
$0 annual fee Up to 10,000 Bonus QFF Points |
0% p.a. for 6 months on purchases & balance transfers |
|
|
|
|
Subscribe to our newsletter and get "The Ultimate Guide to Balance Transfers"
If You Like This Post...
Get all the latest deals, guides and loopholes go in Credit Card Finder's free bi-monthly email. Don't miss out - join the thousands who get it emailed!
Ask A Question