credit reportThere are some credit reporting changes just arrived which may affect you and your ability to get a home loan, a car loan or any other type of credit. Obtaining credit in Australia may be a little different from now on, as since March 12 Australia has stepped into a comprehensive credit reporting regime. We feel it’s important to educate consumers about credit in Australia, so we look at the credit file basics, and what you should know about taking on credit in Australia.

By Graham Doessel, Non-Legal Director of MyCRA Lawyers

We answer your basic questions about credit reporting in Australia…

What is my credit rating?

Your credit rating is a file on your credit history and is collated by the major credit reporting agencies if you have ever been credit-active. Your credit rating is then checked by any financial institution or credit provider and is used to assess both the amount you are able to borrow and your ability to repay the loan.

What does ‘credit active’ mean?

Anyone that has borrowed money, or has established an account for services is credit active and will have a file in their name. This includes mobile phone plans, accounts with utility companies, rates accounts and of course loans of any kind.

What is defined as a ‘bad’ credit rating?

In broad terms, any credit defaults, court actions or writs, external administrations and bankruptcy are all recorded on your credit file and would be considered ‘bad’ credit history by most credit providers.

In this current economic climate, basic defaults and even too many credit enquiries or applications for credit may be considered to be tarnishing your credit rating. Your repayment history may also be considered ‘bad’ credit if you have too many late payment notations against your name.

How do I know if I have a bad credit rating?

If you are unsure what is on your credit file, it would be worth taking the time to find out.

There are three major credit reporting agencies in Australia: Equifax (Formerly Veda Advantage) – which holds the credit file of over 16 million Australians, Dun and Bradstreet and Tasmanian Collection Service.

You can write to or email one of these agencies and request a copy of your file. If you are not in a hurry there is no charge to you but it will take 10 working days from application to receive this information.

What is not realised by many people is how easy it is to have a default slapped on your credit file. If a bill of $150 is more than 60 days late (including rates, power, and mobile phone bills) then a credit provider has the right to notify you of their intention to record this default on your credit file. Even if the account is paid and noted on your file, this default usually remains on your record for 5 years.

In addition to this, if you are more than 5 days late repaying your credit card or loan account – you may also have a late payment notation recorded against your name.

To find out more about credit reporting, you can visit our main site www.MyCRA

If you want to know more about bad credit, look out for our next post where we answer common questions about bad credit, and what you can do if you wish to dispute an adverse credit listing.

Image: Pong/