Anyone who ever received a bad school report card will remember the growing feeling of dread as it’s handed over, and the desperate attempt to think of some plausible explanation for the poor grades.
For some business owners, there’s a strong sense of deja vu during a trip to their bank for a loan, finding out that a blemish on some mystery credit report has caused their loan application to be declined. Does a credit report exist on you or your business? If you’ve ever applied for a loan, a mobile phone account or even a store credit card, then the answer is probably yes.
Credit reports record basic personal or company information, in addition to detailed records of applications for credit, ranging from personal applications for a home loan or credit card, to business requests for trade credit terms from certain suppliers.
Most importantly, credit defaults, bankruptcy, court writs or actions, petitions to wind up and external administrations are all recorded. A credit default remains on your credit report for five years from date of listing, even if they’re noted as paid. Since the information contained in credit reports will directly affect whether you and your business can access credit through financiers, suppliers and even your phone company, it’s important to understand what they are and how they’re used.
Credit reports are collated by three separate credit-reporting agencies in Australia and, crucially, are controlled by strict privacy legislation to avoid abuse. Each time you apply for credit, the lender must get your approval to access your personal credit report.
Lenders closely scrutinise these credit reports in conjunction with their own records and the information you provide, enabling them to make an informed decision on the approval of your loan application and the interest rate you’re offered.
But how do you know what your report contains? The goods news is that you can get a copy of your personal credit report for free by visiting
www.mycreditfile.com.au and
www.dnb.com.au, or if you’re in Tasmania visit
www.tascol.com.au.
You should regularly seek a copy of your credit report, to ensure its accuracy and make sure that there are no unwanted surprises when you next apply for credit. Think of it as part of an annual check-up of your financial health. If you do find blemishes that you feel are unjust, it’s thankfully not like a bad school report — this time you can get them fixed. You should start by writing to the relevant credit reporting agency, outlining the inaccuracy in the credit report and asking them to promptly rectify it.
If these include errors on your record such as incorrect defaults, it’s also worthwhile contacting the credit provider that listed the default on your record. Defaults can only be recorded if the payments were more than 60 days overdue when listed and if you were sent a letter about the default before it was listed. If you’re unable to achieve a suitable resolution, you can also forward your request to the Federal Privacy Commissioner.
In the unlikely event that your review uncovers a large number of credit applications that you have no knowledge of making, then you may have been the victim of identity theft or fraud. If you suspect this, you should report it to the police immediately.
If a default is correctly listed, potential lenders may take a more favourable view if it has been paid. Once you’ve made payment, make sure that the lender notifies the credit-reporting agency, so that it will be noted on your credit report.
To ensure others will take a positive view on your future credit-worthiness, it’s paramount to avoid incurring unnecessary blemishes on your credit record. Make sure loan or bill payments are never more than 60 days overdue unless unavoidable. If you do find that they’ll be more than 60 days late, be in regular contact with the credit provider to minimise the chances of a default being noted on your credit report.
So get a copy of your credit report and know what the lenders know. Remember, like many things in life, the best cure for a bad credit report is prevention!