Your credit report (also known as a credit file) is one of your most important financial assets. Your report shares your credit liability and repayment history including whether your bills and payments have been made on time or not.
Your credit report contains a history of your credit related financial information within the past five years including:
- Credit enquiries & applications
- Monthly repayment history
- Overdue debts and credit accounts
- Payment defaults (also known as clearouts)
- Account open and close dates
- Court judgments and court writs
- Commercial credit information and public record information
What is a Credit Score?
Your credit score (sometimes referred to as a credit rating) is calculated from your credit report.
Credit scoring is a mathematical assessment of the data included in your credit report. The credit score is calculated by the credit reporting agency using a number of complex formulas. While the score range may vary between credit agencies as a general rule scores range from 0 to 1,200.
The higher the credit score the lower the risk that you will default on a loan.
A score of less than 500 could severely affect your ability to gain finance from lenders and you could be viewed as a higher risk.
Your credit report is very important as it provides the information used to calculate your credit score. You will have a credit report if you have applied for any form of credit. This can include:
- Phone, internet or utilities contracts
- Credit cards
- Residential or personal loans
- Hire purchase
How to Protect Your Credit Score
The exact formula used to determine your credit score is a closely guarded secret that not even the lenders know. What we do know is that there are some behaviors that will affect your score that you can control, for example:
- Late payments
- Overuse of credit
- Limiting the number of credit applications
We have had clients apply for finance with us only to be rejected due to a poor credit score. When we investigated the case we found there had been multiple credit inquiries listed in a short period of time.
Unfortunately many major lenders are now treating credit scores as a black and white decision. If your score is too low then the loan application will be rejected - no questions or discussion! Be conscious of the importance of your credit report and make sure you meet all your credit obligations.
How to Access Your Credit Report
You can contact a credit reporting body (CRB) to obtain a copy of your credit report. We've listed some websites below.