How to do a credit rating check in Australia

Your credit rating is one of the key pieces of information lenders assess when you apply for a home loan. Essentially, it reflects your history of borrowing and repayment across multiple credit products and is stated as a number, also known as a credit score. Generally, the higher the number, the better your credit rating.

A credit rating provides banks and lenders with information about your financial habits. It gives some measure of how trustworthy you are when it comes to accessing credit and repaying your debts. For lenders, your credit score essentially represents your financial reputation. In effect, that single number can make or break your home loan application.

Lenders routinely use credit ratings to help them measure the risk of lending to you. In practical terms, your credit score can help them assess how much they are prepared to lend you – or whether they will lend to you at all.

But it’s worth noting a person’s credit rating is not static number. It continues to rise or fall depending on your ongoing financial conduct. While a missed credit card payment can reduce your credit score, consistently paying any debts will get your score up again.

What is included in your credit report?

Basically, your credit report provides lenders with three categories of information about you:

• Your personal data

• Public record information

• Your credit data

Personal data includes just that – your full name, date of birth, gender, home address (usually current and last two addresses), driver's licence number, and employer details.

Public record data searches for publicly available information, including whether you have been subject to court proceedings involving unsettled credit, bankruptcy, or other personal insolvency matters.

However, the most critical part of most people’s credit report is their credit history. As such, when you apply for any credit product, your prospective lender will have access to the following information:

• Loan enquiries you have made in the last five years (including the names of credit providers you have applied to)

• Details of any current debt, including name of the provider, date the account opened, the current limit of the account, the account type, and two-year repayment history showing whether you have made regular, on-time payments

• Details of loans where you are acting as a guarantor for someone

• Any credit defaults and debts that are overdue by 60 days or more

• History of opening and applying for credit products including any previous loans, credit cards, store cards, and certain other products

Financial hardship

Due to changes in the credit reporting system in July 2022, credit providers must now also report financial hardship information to credit reporting bodies.

Financial hardship is a form of assistance borrowers can request from lenders when they are struggling to meet their loan repayments. This is generally on the grounds of changed or unforeseen circumstances including job loss, illness, or natural disasters.

Credit providers may agree to alter the credit agreement to make allowances for the hardship. This can be in the form of deferred or decreased repayments or other concessions. Providers will also relay details of any agreed financial hardship arrangement to credit reporting bodies, outlining whether it is a temporary or permanent arrangement.

Financial hardship information includes:

• Financial hardship indicator, stipulating whether the hardship arrangement was temporary or still applies

• Repayment history under the financial hardship arrangement, showing whether the terms of the arrangement were, or are being, met

How is your credit score calculated?

There are three main credit reporting agencies in Australia: Equifax, illion, and Experian – with the latter two now merged. They are responsible for collecting and distributing the credit data that makes up a credit report. Each agency has its own credit score calculation system, which means your credit score will vary between agencies. However, all calculate your credit score based on the information recorded on your personal file.

Credit scores range from zero to 1,000 or 1,200, depending on the credit agency. Your score will fall somewhere within a five-point grading scale: excellent, very good, good, average, and below average. The higher your credit score, the better it is.

How to check your credit rating in Australia

Under federal laws, a credit reporting body must give you access to your consumer credit report for free once every three months. You can also request a free copy if:

• You’ve been refused credit within the past 90 days, or

• Your credit-related personal information has been corrected or amended in any way

At other times, a credit reporting body may charge a fee, but it mustn’t be excessive. It is worth doing regular credit rating checks to keep yourself updated on your credit record and check for any irregularities. You can check your credit rating in Australia through the following credit reporting agencies:

• Equifax

• illion

• Experian, or

• Get Credit Score (a free online site using Equifax data)

It’s worth noting that not all financial institutions share information with all credit reporting bodies. When choosing which one to get your credit report from, you can ask your lender – or potential lender – which agencies they prefer.

How to get your credit report

For you to access your report, credit reporting bodies will ask you to provide specific information such as your full name, date of birth, current and previous addresses, phone number, copies of primary identification cards, and a document which includes your name and address.

Generally, a credit reporting agency will email your credit report within 10 days. If you need the report sooner, you could ask if there's a fee to expedite the process, which may get you your report a day or two after you file your request.

How to check and correct mistakes in your credit report

It's wise to check every piece of information contained in your credit report. Mistakes can sometimes be made by either the credit reporting agency or a credit provider.

If you notice an anomaly or inconsistency, it’s strongly advised to contact the relevant agency immediately and have any inaccuracies corrected. Here are some of the areas to keep an eye on:

• Outdated or inaccurate personal information

• Repeated debts (or one that is recorded more than once)

• Inaccurate debt amounts

• Incorrect credit defaults

• Outstanding debts you may not have

• Accounts created in error

What to do if you find a mistake

If you find an unrecognisable or unknown listing on your account, contact the credit provider to check its legitimacy. Be prepared though that sometimes credit providers may operate under different names than their recognisable trading names. Similarly, if you have taken up an in-store credit offer with a retailer, these can be outsourced to different credit providing agencies that you may not have been aware of.

However, it can also be possible you may be a victim of identity theft. If you suspect this is the case, you can ask your credit reporting agency to temporarily stop access to your credit report to allow you to investigate and report any suspicious activity.

Does checking my credit rating lower my credit score?

Essentially, checking your credit score does not lower it. Although, anytime your credit is checked (whether by you or an organisation), it is noted on your credit report. Depending on who is checking your credit and why it’s being checked, the inquiry will be noted as either a ‘soft’ or ‘hard’ inquiry. Soft inquiries, such as you checking your own report, do not affect your credit rating but hard inquiries can.

Soft inquiries include:

• Self-checking

• An employer or landlord running a credit check with your permission

• A lender running a credit check to pre-approve you for a loan

A hard inquiry is when a lender or credit provider checks your full credit file before approving you for a loan or other credit product. This check is recorded on your credit report and may affect your credit score.

Be judicious

It’s worth noting that a single lender running a credit check for a pre-approval won’t affect your credit score. But applying for multiple pre-approvals or conditional loans through different lenders can have a negative impact. It’s strongly advised to just stick with one lender if you’re after a particular loan.

Lenders that offer mortgage pre-approval

If you're looking for a lender that offers conditional home loan approval, the table below features some of the most competitive home loan rates on the market:

Important Information and Comparison Rate Warning

What can help improve your credit score?

Your credit score is crucial when applying for a home loan and a strong score can help you secure a more competitive home loan deal.

Here are some practical steps you can take to make sure your credit score is in the best shape it can be:

1. Always make any credit repayments on time

2. Be prompt in settling your bills

3. Avoid applying for any other credit in the months before you apply for a home loan

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