Photo: CreditSmart Day in celebration of the 2018 OAIC Privacy Awareness Week
4 Steps to Improve your Credit Health:
STEP 1: KNOW WHAT IS CHANGING!
Your credit history counts when you apply for credit. The Australian credit reporting landscape is changing in a way that will help people who manage their debt well. Your credit repayments today can impact your credit report and applications for credit now and in the future.
STEP 2: FIND OUT ABOUT YOUR CREDIT SCORE
Your credit score is a snapshot of your credit health, derived from your credit report. In effect, it tells you in a single number what your credit report says about your management of existing credit.
Generally, the higher your score, the better. Movements in your credit score will let you see whether your actions are helping to improve your credit report.
STEP 3: KNOW WHAT YOUR CREDIT REPORT SAYS ABOUT YOUR CREDIT HEALTH
When you apply for credit or a loan, your credit provider may get a credit report from a credit reporting body and use it to help determine if you qualify.
Your credit report includes basic information about you – such as your name, date of birth and driver’s licence number - and information about your credit history – which includes:
- The credit accounts you’ve applied for over the last 60 months
- Your current open credit accounts or those you have had open in the last two years
- Your ‘repayment history information’ - if you’ve been making your loan repayments on time over the last 24 months
- Defaults on your credit accounts (at least 60 days overdue and the credit provider has sent you the required reminders)
- Relevant court judgements or insolvency information (e.g. if you’ve gone bankrupt)
When you apply for a new credit account, the new credit provider uses this information to see how you’ve treated your other debts, which gives an indication about how you’re likely to treat the new debt.
Your credit report can be checked by lenders like banks and other finance companies, and also businesses that sell you things on credit like phone and energy companies. But only banks and other finance companies can record or check your repayment history information.
STEP 4: BE CREDITSMART
CreditSmart provides you with information you need to help you:
- Improve your future credit health by diligently making repayments on time – since lenders will now be looking back at up to 24 months of your repayment history information
- Access your FREE credit report from each of the credit reporting bodies once a year
- Set credit goals and give yourself time to build a solid 6-12 months repayment history track record to showcase how well you manage your existing debt. This will help you apply for that car, house or loan with confidence
- Monitor your monthly credit score so that you are the first to know if something is not right in your credit report
- Fix any errors on your credit report – before applying for a new credit card, loan or mortgage
You do not need to pay someone to fix errors on your credit report. FREE help is available from credit reporting bodies, your credit provider, financial counsellors, ombudsmen, or community legal centres.