How does credit reporting work?

Credit reporting is the sharing of information between credit providers and credit reporting bodies (like Equifax, Experian and illion) about the lending products you have, such as credit cards, personal loans and home loans.

Providers of other types of credit, such as phone, internet and utility providers, can also take part in credit reporting (although cannot share all the same types of information as lenders who offer credit cards, personal loans and home loans).

The credit reporting system in Australia includes both positive and negative credit data about the credit history of Australian consumers. This is known as Comprehensive Credit Reporting (CCR), which provides a more complete picture of a customer’s situation and means that credit providers are better able to match their provision of credit to a customer’s individual needs.

Importantly, positive things that you do such as regularly paying your accounts on time are highlighted by way of a 24-month repayment history reflected in your credit report.

There are three major credit reporting agencies in Australia, and each has its own system for calculating your credit score or credit rating.

What is a credit report?

A credit report is a detailed record of your credit history, including the types of credit you have had and how you have repaid those debts. Your credit report may include a 24-month history of whether you have made your loan repayments on time. This is known as “repayment history information” and a good history will help you to get approved when you apply for credit.

Who can report or access my repayment history information?

Only banks, credit unions and licensed finance companies (that have an Australian Credit Licence) can report or view repayment history information. This means that other businesses that provide credit, such as phone, internet, gas, and electricity companies, are not able to report this information or access it, and so regular monthly payments on utility bills etc are not recorded in a credit report.

Importantly, some buy-now-pay-later providers can report and view repayment history information, but many cannot.

Can I check my credit report?

Yes indeed. And you should!

In Australia, everyone has the right to request one free copy of their credit report every three months from each of the three main credit reporting bodies. These reports include the information that credit providers see when you apply for a loan, so it is important to check and understand each credit report.  

Lenders look at your credit report - including the two year repayment history information - when you apply for credit or a loan. Your credit report is an opportunity to demonstrate to a lender how you manage existing debts.

What is a credit score?

There are three credit reporting bodies who provide credit scores to credit providers. Each credit reporting body has their own way of calculating their score, so your credit score is not the same across the three credit reporting bodies.

Your credit score is a snapshot of the strengths and weaknesses in your credit report, as interpreted by the credit reporting body. If you have a good record of making loan repayments on time, your score is likely to be much higher than if you have missed repayments. Your credit score is derived by a credit reporting body from your credit report. The credit report holds information supplied by lenders to the credit reporting body.

It’s important to remember that a credit score is not the only thing a credit provider looks at when considering whether to give you credit. In fact, some credit providers may not look at the score at all. Either way, all credit providers will also look at your financial situation (including income, expenses and other existing debt) before deciding whether to approve credit.