If you’ve ever wondered what your credit report looks like, wonder no more. This guide will give you insight into your credit report, including what information it contains, how to read it, and why it’s so important.

There are three main credit reporting bureaus in Australia, and you can access their version of your report in a number of ways, including in a written/physical format or through an online dashboard.

Each variation may differ slightly in the way it’s presented, but the bulk of the information will be the similar. For this guide, we’ll be using the convenient (and free!) Credit Simple online credit report dashboard to explain what your credit report contains.

Credit Simple gets its data from the credit reporting bureau illion.

Your credit score

When you first login to Credit Simple, you will see your credit score. This is a reflection of your credit-worthiness boiled down from a heap of lending data into a simple number.

Your credit score and score trend

illion scores range from 0 – 1,000 and the higher the score, the more creditworthy you’re determined to be.

Here’s how the scores break down:

• Score of 0. This is the lowest score you can get and means you’re the riskiest kind of borrower. People with a score of zero either don’t have a credit history at all or have experienced a very negative credit event like bankruptcy.
• 1-499. You have a below-average score and are considered very risky to lend to.
• 500-699. You have an average score and with a few small changes to your borrowing behaviour, you could easily improve your score.
• 700-799. You have a good score and lenders are likely to give you favourable treatment. However, you may want to limit the number of applications you make, as this is what is likely keeping you from having an excellent score.
• 800-1000. You have an excellent credit rating and are considered the least risky to lend to. This puts you in a great negotiating position with lenders.

Your credit history

Your credit score isn’t a magic number that is pulled out of thin air. It is the result of a calculation that incorporates heaps of data around your borrowing habits. The data that your credit score pulls from is called your credit history.

Credit Simple also provides your credit history, broken down into the following categories:

• Personal information. Your name, date of birth, address and previous address.
• Accounts. The accounts you have open including mortgages, credit cards, utility accounts and even equipment hire. It also includes details like the amount you owe and a complete breakdown of your payment history.
• Enquiries. The times you’ve authorised a lender or a utility to do a hard enquiry into your credit history (a hard enquiry is an official inquiry related to an application for a loan). Looking at your own credit history (soft enquiry) won’t decrease your score, but too many hard enquiries can lead to a small deduction.
• Authorised agent enquiries. The times you’ve allowed an authorised agent, such as a mortgage broker or a car dealer, to do a credit enquiry on your behalf.
• Defaults. Any payments that are at least 60 days overdue (or were at least 60 days overdue at the time of payment).
• Serious credit infringements. Situations where a lender believes you fraudulently tried to obtain credit or tried to fraudulently avoid your credit obligations.
• Judgements and Summons. Publicly available court records pertaining to your debts.
• Personal insolvency. Publicly available data from the Australian Financial Security Authority related to bankruptcy.
• Other public record information. Other publicly available information that may be useful to potential creditors when determining your creditworthiness.
• Company directorships. Publicly available information from the Australian Securities and Investment Commission about any previous or current directorships you’ve held in any company.
• File notes. Notes placed on your credit history (at your request) explaining or disputing the circumstances surrounding information on your report.

Here’s what it looks like in the tool:

The categories of reporting in your credit report.

You can expand each section to see much more detail about each. Here we are looking at payment history of a specific account listed in the accounts section:

A detailed repayment history for an example account

What can you do with this information?

As you can see, a credit report is quite straightforward although it can contain quite a bit of information. The good thing about a tool like Credit Simple is that it allows you to have all of this information at your fingertips and dig through it systematically.

Going through your report with a fine-tooth comb can help you in a number of ways. You can:

• Identify areas where you could improve. If you see that late payments are hurting your score more than you thought they were, it’s likely to propel you to make changes.
• Identify errors in your report. If you see something reported that you dispute, you can bring this up with the lender or the credit bureau. Credit Simple lets you lodge a dispute right through the tool.
• Negotiate better terms. If you see that you have a good score, you can have more confidence in negotiating with your lender for better terms like lower interest rates and reduced fees.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

The post Here’s what a credit report actually looks like appeared first on Credit Simple.

Major financial troubles can be avoided with some significant consideration about the way you spend money.

It’s easy to become overwhelmed by your finances, but finding a path forward is a better use of energy.

The post How long does it take to recover from serious financial difficulty? appeared first on Credit Simple.

I’m working hard to improve my credit score these days. In the past I was a bit of a bad boy when it came to paying bills – so I’ve been looking into what will kill your credit score, and fast. Real fast.

Your credit score, which is sometimes referred to as your credit rating, will generally range from 0 to either 1,000 or 1,200 depending on the credit bureau calculating it. Your illion score via Credit Simple will range from 0 – 1,000.

An average credit score ranges from 500 to 699, 700 to 799 is very good, 800 to 999 is considered excellent, and 1,000 is a perfect score. 

Anything less than 400 is going to make your financial life a whole lot harder. The lower your score, the harder it is to borrow money, get a home loan, or even open a utilities account.

So with that, here are nine ways to kill your credit score.

Naughty you 1: Live in the wrong suburb.

We know you can’t help this – unless you move. It seems unfair, but statistically the people in some suburbs or towns or areas are more likely to be bad payers than their peers elsewhere. Credit providers base their lending criteria on risk and where you live is one factor. Moving house too often also affects your credit score. That’s because people who move home are more likely to leave bills behind. Potential mark down: 20-100 points.

Naughty you 2: Apply for too much credit.

It is okay to shop around and ask prices. What does affect your score is the number of times you apply for credit including opening utilities accounts. The more there are, the lower your score. A number of applications in very short succession can say a lot about you. A worst case scenario is that there’s fraud involved. It might also say that you’re a bit desperate or your credit is so bad that these companies are turning down your applications. This is a lot of credit activity in a short amount of time – your score could drop by as much as 150 points.

Naughty you 3: Take out too many small-value loans.

If you’re always borrowing small amounts you’re going to look like someone who is bad with money. Potential mark down: 120 points. 

Naughty you 4: Paying late.

Falling behind in your regular payments soon starts to affect your credit score. Some people pay as late as they can every time. The reality is with banks now reporting positive behaviour such as paying on time, late payers are going to stand out. You may earn a few cents extra interest by delaying bill payments. But it’s just not worth it if it’s wrecking your credit score. It’s also less stressful to pay on time. Trust me. When I started paying everything by direct debit my life got so much easier. Potential mark down: 60 points. 

Naughty you 5: Get defaults.

In the world of credit scores, defaulting is pretty up there as one of the biggest “no nos”. Defaults can be loaded in by all sorts of organisations ranging from utility companies, banks, the Inland Revenue Department, your landlord, courts or councils for unpaid fines, or even a breached gym membership.  The more defaults on your credit record the worse your score. Potential mark down: 60 points. 

Naughty you 6: Be too young.

There’s not much you can do about this. But younger people are greater credit risks and are more likely to pay late, go into default or commit fraud. Your credit score will naturally improve as you age. Potential mark down: 20 points.

Naughty you 7: Not paying items in dispute.

Even if you’re in dispute with a creditor you need to keep paying until it’s solved. Potential mark down: 60 points.

Naughty you 8: Going insolvent.

Oh dear. If you’ve got a bankruptcy on the books you’re the lowest of the low as far as credit scores go. The good thing is that it can’t haunt you forever. When you can get credit again, make sure you pay your bills on time every time to resurrect your credit score. Potential mark down: 400 points.

Naughty you 9: Having no credit history.

You might think you’re goody two shoes for never having taken credit out. The reality is that you’ve not shown that you’re good at making repayments. If you’ve been paying your electricity bill on time for 12 months your score could go up by around 80-100 points.

We know things can go wrong in people’s lives. When it comes to credit scores you can turn it around. But that means taking positive action to change your ways. If you think you can do it, you will. We have faith in you.

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