Credit reports and credit scores.

Your credit score is an important piece of the puzzle when a lender is assessing a credit application. Find out about credit reports and credit scores, and how you can take care of your credit score, so it doesn’t let you down next time you’re looking to borrow. Download our helpful factsheet.

What’s a credit report?
A credit report is the summary of your credit history. Your credit report is compiled from:

• All your past and present borrowing activities. Things like the loans you have applied for, the money you have borrowed, and whether you’ve repaid it on time.
• Telecommunication and utility providers report on unpaid or late payments of bills.
• ASIC and the court system also provide information on outstanding judgements or bankruptcies.

The information is compiled by credit bureaus such as:

• Equifax
• illion (formerly Dun & Bradstreet)
• Experian

If you apply for a personal loan, mortgage or other type of credit, lenders will often access your credit report as part of their assessment of your application. This is why it’s important to maintain a healthy credit report.

What’s a credit score?
All of this information is distilled down into a Credit score. Depending on which agency you obtain your score from this could be a number between 0 and 1000 or 1200. The higher your score the more creditworthy you are deemed to be, based on your payment history.

Finding out your credit score.
You can access your credit report from any of the credit bureaus named above – and you’re entitled to receive a free credit report annually. A quick and easy way to do this is by registering online with a credit bureau.

You can also obtain your credit score for free at the following websites:

• Credit Savvy
• Credit Simple
• Get Credit Score
• Wisr

Regularly check your credit score. 
It’s a good idea to regularly check your credit report to review its accuracy and ensure that it hasn’t been impacted by fraudulent activity such as someone applying for finance in your name. If your credit score isn’t looking as healthy as you think it should, look through the report for inaccuracies or incorrect entries. You may find multiple credit enquiries in a short space of time, multiple credit cards with high limits, late repayments or unmade payments. If you find any inaccuracies, approach the credit provider to have the report corrected. If you are unhappy with the response, you will be provided with the details of the Australian Financial Complaints Authority who can provide an independent review of the matter. This is a free service for consumers. A credit repair agency can also help you with this, but they will charge you a fee for their service.

6 ways to maintain a healthy credit report and score.

Keeping your credit score healthy may be greatly helped by adopting the following 6 habits.

1. Pay bills and loan repayments on time.
By paying all your bills on or before the due date, a record of consistent and punctual payments will help significantly towards maintaining a healthy credit report. If you miss a payment, this can leave a black mark on your credit report and reduce your credit score. If you don’t think you’ll be able to make a payment on time, contact your lender or service provider and make alternative arrangements.

2. Paying your credit card off in full each month.
Getting into the habit of paying your credit card off each month is good for your credit score and for your overall financial goals. It also shows lenders that you have a good track record of being responsible with credit. If you are going to use your credit card for something that will take you longer than a month to pay off, look for a card with a lower interest rate and pay as much as you can each month rather than just the minimum monthly repayment.

3. Avoid making excessive credit enquiries.
Every credit enquiry, approved or not, will be included in your credit report, which in turn may affect your credit score. Many lenders consider multiple credit enquiries, particularly in a short period of time, as indicative of a greater risk and it may impact whether they approve your credit application.

4. Pay off outstanding loans and debts as soon as possible.
Paying off outstanding loans and debts as soon as possible not only reduces your interest costs, but it establishes a good track record of using and repaying credit. This helps strengthen your credit report and score.

5. Consolidate debts.
If you have multiple loans or credit cards, consider combining them into one. You may be able to have one larger loan at a lower interest rate and you’ll only be paying one set of fees. This may reduce your costs and simplify your repayments. It may also be considered by lenders as indicative of responsible credit use. Just take care that you’re not extending short term debt over a longer term as you may end up paying more in the long run.

6. Minimise unused credit.
If you have credit card limits that you never use, contact your lender and ask to have them reduced. Strange as it sounds, this unused credit could be impacting your credit score as well. 

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.