A credit report is a detailed report prepared by Credit Reporting Bodies. Financial institutions collect information and create credit reports based on that information, and lenders use the reports along with other details to determine loan applicants’ worthiness.

Negative credit reporting is the system, which was based around only making a note of negative credit events. Lenders based their assessments of a potential borrower applicant solely on whether the applicant had any negative reports on their credit history, such as missed repayments.

Positive credit reporting is Australia’s new credit reporting system aimed at making it easier for lenders to form comprehensive and well-balanced assessments of applicant’s histories. The credit report includes information about current accounts held, what accounts have been opened and closed. The date default notices were paid and whether repayments we met.

A credit rating or ‘credit score’ is a numerical score that represents how trustworthy your reputation is as a borrower. It is a summary of the information provided by your credit report. A higher score means you have a good credit rating, with a lower score meaning you have a bad credit rating. Your credit rating is important because it directly influences the amount of credit that a lender will may available to you as a borrower and the interest rate and other terms the lender may offer. The credit score bands are as follows:

Excellent: 833 – 1200

Very Good: 726 – 832

Good: 622 – 725

Average: 510 – 621

Below Average: 0 – 509

Over time, once the relevant data is provided by lenders, credit reports will include information about consumer credit liabilities and repayment history. This is in addition to the information already included in credit reports.

Consumer credit liability information includes:

• Types of credit accounts;
• Dates these accounts were opened and closed;
• Details of the respective credit providers;
• Credit limits on these credit accounts.

Repayment history information includes:

• Information relating to consumer credit such as credit cards, personal loans or home loans;
• Whether required minimum payments were made;
• Whether payments were made on time;
• 24 Month account payment history.

Members may benefit from the inclusion of positive information in credit reports. A positive credit history may be established in a shorter period, and should you encounter a negative credit situation such as a late payment, it may be easier to show when you have recovered. More recent positive credit behaviour may also balance earlier negative credit behaviour.

It is important to ensure that you pay your bills on time to avoid any negative impacts on your credit report. If your payment is not made by the due date, it may be recorded in your credit report as part of your repayment history.

Repayment history information is kept on your credit file for two years. Default information is kept on your credit file for five years. Therefore, it is important that if you are experiencing financial hardship, contact us as soon as possible.

• Set up direct debits, which will help to ensure that your bulls will be paid on time;
• Inform relevant credit providers if your personal details change;
• Only apply for credit if you need it and can afford it.