The credit rating is a cumulative score based on the information available on your credit report. One in ten Australians have a black mark on their credit report that hinders being approved. There is a misconception that credit rating can be improved just by paying back to the creditor, if it has been reported as a default.
However, credit rating in Australia is based only on negative impacts or events such as missed payments and a negative listing (black mark) stays there on credit file for 5 to 7 years, even if the missed payments are paid or defaults are settled. This may allow credit providers to deny you a loan even if there is just one black mark, regardless if it is paid or not.
Your credit file is like a repository of your past financial activities and contains details regarding your addresses, employment history, credit applications and negative listings.
Whenever you apply for a loan, even a mobile phone on a contract or for an interest free store offer, it is more likely that your details have been given to credit reporting agency. The credit report is viewed whenever you apply for any loan, credit cards, mobile phone contract or even a car leasing. These are called enquiries and may be listed on your report.
Your credit file contain information about your home address, current and past employment history, bankruptcies, credit applications, overdue accounts, defaults, judgments, clear-outs, crossed or linked files, past names, etc. and is sometimes used to determine your credit worthiness.
Your credit report will have a credit score based on your financial history and credit health. Majority of lenders in Australia have a minimum credit score requirement to be eligible or to be approved for a loan.
There are three main Credit Reporting Agencies in Australia. The largest and most used by lending institutions and creditors is Veda Advantage.
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