Let’s break down how you can check your credit score, as well as how to fix any errors in your credit report.
A credit rating or credit score is a numerical score that shows lenders how trustworthy your reputation is as a borrower. It sums up the information on your credit report into one number, and it’s a good idea to know what that number is.
So how exactly do you check your credit score? It is a good idea to check your credit score as regularly as you can. And if you do have a low score, there are steps you can take to help improve it.
Why do you need to check your credit score?
Your credit score is important because it may influence how much credit a lender will give you as a borrower. People with a lower credit score may be viewed by lenders as being a bigger risk of not paying back the money.
If your credit score is good, it shows a lender that you have the ability to meet your financial obligations if they give you a credit card or a loan. A bad credit score could result in you getting charged extra interest or getting knocked back on a loan altogether.
Tim always paid off his debts on time. After moving house, Tim didn’t receive his credit card statements for almost 6 months.
This resulted in him missing some of his payments, and a default was listed on his credit report.
The next time he applied for a loan, Tim had to pay a much higher interest rate. This could’ve been avoided if he’d checked his credit score and listed an error with his bank.
How much does it cost to check your credit rating?
It is free to check your credit rating with the three main credit reporting agencies: Equifax, Dun&Bradstreet, and Experian.
How much does it cost to check your credit report?
You can get a free copy of your credit report within 10 working days from the main credit reporting agencies: Equifax, Dun&Bradstreet, and Experian. You can obtain a free copy once per year. However, it is probably best to check your credit report more often than this.
If you want to get your credit report faster, you can pay upwards of $60 for a 1-day turnaround in accessing your report.
It is important to know that a free copy of your credit report is available. According to Fiona Guthrie, the Executive Director of Financial Counselling Australia (FCA), credit reporting bodies often make it difficult for customers to know that a free check is an option.
The FCA reported a recent website check revealing that the two largest credit reporting agencies in Australia prominently promote access to their fee-based credit reports, but make it much harder to find information about the free option.
“Under the new Credit Reporting Privacy Code, credit reporting agencies must make sure that the free option is as available and easy to access as the fee-based service,” said Ms Guthrie.
“We look forward to the websites being updated.”
According to the Office of the Australian Information Commissioner, you can get a copy of your credit report for free from a Credit Reporting Body in all of the following circumstances:
- If you have applied for, and been refused credit, within the past 90 days.
- Where your request for access relates to a decision by a CRB or a credit provider to correct information included in your credit report.
- Once a year (not counting the above circumstances).
When should you check your credit score?
According to the section above, you can get a free credit report every year. In addition to checking it every year (or several times a year if necessary), you ideally should check your credit score:
- Once every year or so
- Before applying for a loan, such as a home loan, car loan, or personal loan
- If you think your personal identification details may have been stolen, either physically or online
What is included in a credit report?
In addition to your current personal information, your credit report will usually include information about your history of opening or applying for credit cards and loans and other types of credit (e.g. mobile phone post-paid plans), your record in terms of repaying those credit accounts (including late payments or missed payments), the maximum credit limits available to you on those accounts, and more. Read this article for the full list of what is included in your credit report.
Since Australia switched to a Comprehensive Credit Reporting (CCR) system, your credit history also now includes more general information about the financial accounts you currently have, what accounts have been opened and closed, and how well you meet your repayments.