Everything you need to know about your credit score report

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How banks use credit reports when assessing you for a loan


If you want to borrow money, few things will be more important than your credit score report. That’s because almost all banks and other lenders will use your credit report as their first port of call in assessing the risk of providing you with a home loan, personal loan, credit card or other finance.

So here’s our guide to what goes into a credit report, as well as what lenders look for.

What is a credit report and how do you access yours?

Put simply, your credit report shows your relationship with credit. Generally, a credit report will list every time over the past five-ten years that you’ve applied for - for instance, credit cards, phones, utilities, home loans or other loans - as well as how much credit you’ve applied for. It will also show defaults or late payments on those facilities, as well as any bankruptcies or court orders against you.

Accessing your credit report before you apply for a loan can give you an insight into what the banks will see when assessing your loan. You can retrieve yours from a credit bureau, such as Veda, Dun and Bradstreet or Experian.

How do you get a good credit rating?

Some people may think that a healthy credit rating comes from having no debt. That’s not the case. A good credit rating actually comes from proving that you can use credit responsibly. So, if you’re looking to borrow a substantial amount for a home loan or other investment, you shouldn’t look to avoid debt altogether.

But, at the same time, don’t be tempted to apply for credit just for the sake of it.

When a bank or other lender assesses you for a loan, they will always assess your ability to service a loan as well as your credit rating score. And that means taking into account the amount of credit you have access to, even if you’re not using it.

So you may also consider paying down and closing some of your credit cards and personal loans if you have no need for them.

By paying your bills on time and always meeting your credit card and loan repayments when they fall due, you’ll will also be able to use your bank statements to show lenders you can manage debt responsibly. You should even consider paying your debts off early when you have the money available to do so.

What if there are inaccuracies in your credit report?

While your credit report is important, it may not always be 100% accurate. There may be times where a credit provider has listed a default against you by mistake. So the first thing you should always do when you get your credit report is to make sure that it reflects the truth.

If you do find an error, it’s important that you contact the company – whether it is a bank or utility provider – to investigate the error and amend it.

If you are not satisfied with the outcome, you should contact the ombudsman in charge of that industry, such as the Financial Ombudsman, Credit & Investment Ombudsman or Telecommunications Ombudsman.

By paying your bills on time and always meeting your credit card and loan repayments when they fall due, you’ll build a credit history that goes some way to showing prospective lenders you manage debt responsibly.

For how long will a missed payment appear on your credit report?

Most credit bureaus report a late payment of more than 14 days for two years. Defaults - or late payments of more than 60 days - will usually appear on your credit report for five years.

How to improve your credit report

Finally, if a bad credit report is getting in the way of obtaining finance, there is no easy solution. Rectifying the situation begins with sticking to your budget and paying all your bills, credit cards and loans on time.

To find out more about smart ways to use your credit card, call 1300 150 300 to speak with a specialist and have your questions answered.

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