How to protect your credit rating

You can get a free credit report every 12 months – and you probably should. Here's why.

Get regular checks

When you need a home loan, personal loan or car finance, you need it now, and a bad credit rating because of a mistake on your credit file can mean a delay of a few weeks or months. That's why it's a good idea to order your credit report regularly to make sure everything is up to date and your credit rating is not affected by incorrect information. Your credit history is held by private credit reporting agencies such as Veda and Dun and Bradstreet, and you can do a credit check for free every 12 months.

These agencies also offer paid express credit ratings and other options, such as a credit alert or credit score. The paid services are advertised prominently on their websites, while the link to the free credit report is hidden.

Don't pay unnecessarily for a free report

In December 2016 consumer organisations won a case against credit reporting agency Veda Advantage Information Services and Solutions Ltd (Veda). The Privacy Commissioner ordered Veda to refund thousands of consumers who were charged by Veda for obtaining a copy of their credit report. 

In addition, Veda was given six months to change its website and phone system so its service of providing free access to credit reporting information is as available, and as easy to identify and access, as any fee-based services offered.

Following complaints by the Financial Rights Legal Centre, Consumer Action Law Centre, Financial Counselling Australia and the Australian Privacy Foundation, the Privacy Commissioner found that Veda was in breach of privacy rules, as the agency: 

  • charged consumers for "expedited delivery" of a credit report where the consumer had not sought access to a credit report in the previous 12 months and therefore was eligible for a free report
  • failed to prominently state on its websites that consumers have a right to obtain their credit reporting information free of charge
  • did not take reasonable steps on its websites and phone line to ensure that the option of free access to a credit report was as available and easy to identify as access to paid credit reports
  • used personal information it held on consumers for the purposes of direct marketing, in breach of privacy rules.

How to order your free credit report

Credit reporting agencies are required to make free credit reports available. You can order your free credit file from:

How does credit reporting work?

A positive credit reporting regime which began on 12 March 2014 means credit card or personal loan payments made more than 14 days late will leave a black mark on your credit rating.

Payment history information on your credit report can cover:

  • credit cards
  • car finance (car loans)
  • home loans
  • personal loans
  • store finance offers
  • other types of consumer credit.

Late payments for utility bills such as electricity or phone only appear on your credit rating if you're 60 days or more late making the payment. 

What's on your credit report? Click here for an accessible text-only version of this infographic

What information affects your credit rating?

Before 12 March 2014, only major infractions were noted on your credit report, such as dodging a bill altogether. These are defined as defaults and will still go on your file, but now the unpaid bill will have to be at least $150 to count as a default.

The regime will also keep track of a range of other information that was previously unrecorded, including:

  • the date a credit card or personal loan was opened and closed
  • the maximum credit limit
  • whether you made the minimum payment on time.

The same applies to mortgages, investment home loans, car loans and store finance offered by a licensed credit provider such as your bank or credit union. Whether or not you paid on time will be noted each month and the information retained for two years.

  • 5 years – how long information about a bankruptcy stays on your credit report.
  • 5 years – how long information about a payment default for consumer credit such as a credit card or utility bill of more than 60 days stays on your credit report.
  • 2 years – how long information about a delay of more than 14 days in paying your credit card, home loan or personal loan stays on your credit report.

How can you protect your credit rating?

Arrange a direct debit for at least the minimum payment on all your credit cards and other loans so that you can avoid late payments.

How to fix mistakes on your credit report

More information for credit reporting agencies means more opportunity for mistakes – and there were already plenty of them with the previous system:

  • 30% of Australians who had ordered their credit report found mistakes in it, according to a 2013 survey by the Office of the Australian Information Commissioner.
  • Only 60% of people in the survey who found mistakes got them sorted out.
  1. Order your free credit report once every year.
  2. Check your credit history.
  3. If there's a problem, contact the utility company or credit provider, or the credit reporting agency.
  4. Once the problem is fixed, the credit reporting agency should notify you in writing.
  5. If you're not satisfied with the dispute resolution scheme's decision, make a complaint to the Australian Information Commissioner.

If the problem on your credit file is not fixed, contact the relevant external dispute resolutions scheme – the utility company or credit provider and the credit reporting agency will be able to tell you the correct scheme.

Dispute resolution agencies for services providers:

Could you have bad credit without knowing?

David Leermakers, senior policy officer at the Consumer Action Law Centre was denied a personal loan to pay for his wedding because of an unpaid $350 phone bill listed on his credit report. "This was before I worked at Consumer Action, and at the time I knew virtually nothing about credit reporting." 

It turned out the bill was from a time David had lived in a shared house and his name stayed on the bill after he moved out. The other tenants failed to pay the bill. "As we needed the loan quickly, I just had to sort it out. I paid the debt and the loan was approved."