What's in your credit report and how to keep it healthy

Your credit score is an important factor in whether or not you can get financing to buy a house, a new car or even go on holiday.

Credit scores: every Aussie adult has one. But according to CreditSmart, 6 out of 10 people have never checked theirs. If you’re one of them, it might be time to get familiar with what’s in your credit report and start thinking about how to keep it in tip top shape.

Why your credit matters

Think of your credit score as an Uber rating for your finances - just like your Uber rating lets a driver know if you make a good passenger, your credit report lets lenders know how responsible you are and how likely you are to be a good borrower. 

“Your credit report is a way for lenders to see how you handle the credit you currently have and assess whether the credit you’re applying for is right for you. Better still, a good credit report might open the door to better deals,” Cremin explains. Visit CreditSmart for your free credit check.

If your credit report is so important, it’s even more important to understand how to keep it healthy.

What’s in your credit report

The first step is to get familiar with just what information your credit report contains. There are two main components to your credit report: your personal details, and consumer credit liability information.

Your personal information is used to identify you, and could include your full name, gender, date of birth, address, employer and driver’s licence details.

Information about your credit liability covers off the details of any credit accounts you have access to, or had access to in the last two years. The report will include information like:

What credit sources you have, the credit limits and when the account was opened and closed. This could include personal loans, home loans and credit cards.

A list of any credit applications you’ve made over the past five years. Even unapproved applications will show up as an ‘enquiry’ on your credit report.

Your repayment history on loans and credit cards, for up to two years. This shows a potential lender whether or not you reliably meet your repayments. Keep in mind, phone or utility bills aren’t recorded as repayments.

Credit defaults are listed on your credit report as well. A default can be recorded if you miss a payment of at least $150 by 60 days or more. Unlike repayment history, the record of defaults does include phone and utility bills.

Your credit report also includes your credit score, which is a snapshot of all the other information contained in the report. Depending which credit agency you get your report from, your score will be a number between zero and 1,000 or zero and 1,200, and fall into a rating of Excellent, Very Good, Good, Average or Below Average.

What’s not in your credit report

There is some information about you and your personal finance situation that isn’t included in your credit report, like your annual income, past insurance claims you’ve made or traffic fines you’ve paid.

Personal details like your marital status, political and religious beliefs or health information also don’t factor into a credit report.

How to keep your credit score in shape

The good news is, by reading this article, you’ve already taken the first step towards keeping your credit healthy, which is being aware of what it means and just how important it is. But there is more you can start doing today to keep your credit report healthy.

Check your credit report annually. You’re entitled to one free copy of your credit report from each of the official credit reporting agencies in Australia each year. It’s good to get in the habit of checking over your report each year, to ensure everything is correct.

Be proactive about fixing any mistakes. If you do find a mistake in your credit report, don’t delay in contacting your credit provider to have it fixed. But be wary of companies claiming to be able to ‘fix your credit’ for a fee - it’s free to fix mistakes in your credit report.

Keep on top of loan and credit card repayments. One of the quickest ways to put a dent in your credit score is to start missing repayments on your credit card or other loans. Your credit report includes your repayment history for the past 24 months. So be sure to set reminders for due dates, and never bite off more than you can chew when it comes to borrowing, or spending on your credit card.

Approach borrowing sensibly. Each application you make for credit will go on your credit report, which means it pays to be selective about the applications you make. Don’t borrow when you don’t need to, and if you’re after a loan or credit card, only apply for one at a time.

Lower your credit limits. Lenders look at the total amount of credit available to you, not just how much you’ve drawn down on. The higher your total credit limit, the more debt you could potentially have in the future. Lowering your credit limit will also help prevent you spending more than you should and missing repayments.

Just be careful - along with your credit limit, you should keep an eye on your credit utilisation, and make sure you aren’t regularly maxing out your credit cards.

Ask for help if you’re struggling. If you’re finding it hard to meet repayments, reach out to your bank or lender sooner, rather than later. They may be able to help by reworking your repayment schedule, granting you a temporary repayment holiday or even lowering your interest rate. By getting help early, you may avoid defaults or missed repayments, which look bad on your credit history.