Bad Credit Report?
When you find out you have a credit issue on your credit file, it can be a little bit overwhelming, especially if you really don't know how it got there, or what the credit default is all about.
We do see from time to time mistakes on credit files, and sometime we even see someone with a similar name to yourself, end up with their credit default on your credit file.
Our advice is to always go to www.veda.com.au first and speak with them about the issue.
Here is some further information about Veda and credit reports:
What is a credit report?
Understanding your credit report enables you to make more informed decisions regarding your finances. Utilising the services of Veda, Australia's number one credit information provider for consumers, your report is also a tool credit providers use to help them ascertain your financial reliability.
A credit report includes information about you such as your full name, date of birth, driver's licence, gender and residential addresses and employer information. A credit report has 3 distinct sections. These are:
1. Consumer credit information which may include:
- credit applications made in the past five years relating to loans for household, personal or family purposes as well as for the purchase, renovation or re-financing of a residential investment property.
- details of overdue consumer credit accounts
From 12 March 2014 additional “positive” information can be included in credit reports, including:
- Type of credit account such as a credit card or personal loan
- Account open date and close dates
- Credit limit. This is the maximum amount of credit available to you for an account. If you accept a credit limit increase the new credit limit could be included on your credit history.
- Monthly repayment history on credit accounts such as mortgages and credit cards. This will reflect whether you paid the minimum amount required on your financial commitments each month on time or not.
Please note it will take time for the new data to build up and we anticipate collecting this information over the coming months from credit providers. This means that this new data will not be reflected in your credit report immediately.
In addition, for the purposes of consumer credit reporting only, the following publicly available information is consumer credit information:
- court judgements and court writs
- directorship details
- proprietorship details
- bankruptcy, debt agreement and personal insolvency information.
- Overdue Accounts may be reported as a "payment default", serious credit infringement or a "clearout".
- A consumer credit payment default is an account of $150 or more that is 60 days or more overdue. For example, if you have a telephone bill of over $150, and it was due more than 60 days ago, it could be listed on your credit report as a payment default. In the case of commercial credit the minimum amount for a default is $100.
Before listing a consumer default, the credit provider has sent a written notice seeking payment of the overdue debt and a written notice stating that the default may be listed with a credit reporting body. Potential credit providers may look unfavourably on applicants with a history of overdue accounts, so it's a good idea to avoid defaults getting onto your credit report. To do this, you need to ensure you pay your bills before they become overdue.
If an overdue account is listed on your credit report, the credit provider is required by law to update the listing, as soon as practical, once you've paid the overdue amount.
A payment default stays on your credit report for five years, even when you have paid the overdue amount. The fact that an account has become overdue and then been paid becomes part of your credit history.
Serious Credit Infringements (Clearouts)
- A clearout is also sometimes called a "confirmed missing debtor". It means that, at the time of listing the person who owes the money could not be located despite attempts to contact them.
- Before you can be listed as a clearout, the credit provider must first reported the debt as a default, have made attempts to contact you and must have had no contact in the preceding 6 months.
- Clearouts remain on your report for seven years from the date they're listed, unless it has been paid and then it will revert to a default and remain on your report for five years.
- The fact that an account has become overdue and then been paid becomes part of your credit history.
2. Commercial credit information may include:
- credit enquiries pertaining to applications for credit for commercial purposes
- details of overdue commercial credit accounts
3. Public record information
When you get a copy of your credit report this information will form part of consumer credit part of your report.
What is a VedaScore?
Your VedaScore is an important number that summarises the information in your Credit Report and is expressed as a number between 0 and 1200. Your VedaScore can help you understand how the contents of your credit report affect your credit rating. In simple terms, the higher your VedaScore, the better your credit profile and the more likely you are to be accepted for credit.
As your VedaScore shows where you sit in relation to other credit-active Australians in our credit-reporting database, it may be used by lenders as part of their credit assessment process. If you’ve got a low VedaScore, your credit applications may only be approved by lenders that charge a much higher interest rate or you may have difficulty gaining access to credit at all.
What could influence my VedaScore?
When you receive your VedaScore as part of a Veda Credit & Identity package, you’ll also receive a list of score contributing factors – things that have influenced your VedaScore. This can give some insight into what you’re doing well and what areas might need some work, so you can improve your VedaScore over time.
How is my VedaScore calculated?
Your VedaScore is calculated based on the information held in your credit report at a given point in time. Your VedaScore is dynamic and predicts the likelihood of an adverse event, like a default, being recorded on a credit report within the next 12 months. Your VedaScore shows where you sit in relation to other credit-active Australians in our credit-reporting database. This may be used by lenders as part of the credit assessment process; however, lenders will also use their own criteria and policies when assessing your application not only your VedaScore.
There are a number of key contributing factors that are taken into consideration when generating your VedaScore:
Type of credit provider
The type of credit provider making an enquiry on your credit report may impact your VedaScore. E.g. there may be different levels of risk associated with approaching a bank, store finance provider, hire-purchase and utility company for credit.
What’s more, research shows that there’s a different level of risk associated with lenders in particular industries. E.g. a non-traditional lender may have a different level of risk than a bank or credit union.
The type and size of credit requested in your application
Both the type of credit and size of the loan or credit limit you have applied for in the past can have an impact on your VedaScore. E.g. mortgages, credit cards, personal loans and store finance may carry different levels of risk.
Number of credit enquiries and shopping patterns
Every time you apply for credit and a credit provider obtains a copy of your report, an enquiry is added to your credit file. This can include any loan, mortgage or utilities applications you may make.
Shopping around for credit and applying to a number of different credit providers within a short space of time may negatively impact your VedaScore. It flags you as a greater risk than infrequent applications for credit with a few credit providers.
Directorship and proprietorship information
Directorship and proprietorship information on a credit report may impact your VedaScore. If you’re a director or a proprietor it’s important to check the individual and commercial sections of your credit report.
Age of credit file
The date your credit report was created may impact your VedaScore. E.g. a relatively new file may indicate a different level of risk than an older file.
Pattern of credit enquiries over time
The spread of activity over the credit report’s life to date can have an impact on your VedaScore. E.g. a relatively new credit report with many enquiries may represent a different level of risk than an older report with only a few credit enquiries.
Your VedaScore takes into consideration personal details such as age, length of employment and length of time at your current residential address to assess risk.
Default information in your credit report such as overdue debts, serious credit infringements or clearouts may negatively impact your VedaScore, while a lack of default information in your report may positively affect your score.
Court writs and default judgements
A court writ or default judgement on a credit report is an indicator of increased risk and may negatively impact your VedaScore. Conversely, a lack of court writ or default judgement information would indicate a reduced level of risk.
Commercial address information
Information such as location and the length of time you have resided at your current business address is a measure of stability and may impact your VedaScore.