Much like your physical health, your credit health can have a big impact on your overall wellbeing. It can determine things like whether you will be able to get a loan to help you achieve an important life goal, or how much you might need to pay in interest if you do get a loan.
But it appears many of us could do with some help with keeping on top of our credit health.
- One recent survey showed that half of us are completely unaware of what lenders look for in our credit report, a big indicator of overall credit health.
- Another study suggests that more than 1 in 6 Australians struggle with their credit card debt.
The good news is there are some simple steps you can take improve your credit health.
1. Know what goes into your credit report
This is important, as lenders may look at your credit report when they decide whether to give you a loan.
Your credit report is essentially a summary of your credit history. Credit reports are compiled by credit reporting bodies, using information provided by lenders you have used (how Great Southern Bank uses members’ information).
With the introduction of ‘Comprehensive Credit Reporting’ in Australia, your credit report may now show positive as well as negative activity relating to your credit history, including;
- Repayment history on a month-by-month basis for the last two years showing whether you’ve made your loan payments on time.
- Credit products you’ve held in in the last two years, like credit cards or loans, plus details including the credit limit.
- Credit applications you’ve made in the past five years, whether they were approved or not.
- Defaults and serious credit infringements including utility bills or loan repayments which are 60 days or more overdue and where debt collection activity has started.
- Court judgements and insolvency information, for example if a court has made a judgment against you in relation to unpaid loans, or if you have gone bankrupt.
More info on what goes into a credit report
It’s also important to know that your credit report is different to your credit score. Your credit score, sometimes called your credit rating, is a number that’s based on your credit report and is used to indicate how likely you are to repay money you borrow.
2. Check your credit report
Did you know that you can check your credit report once a year for free? It turns out 61% of us have never checked their credit report.
You can do a check through the credit reporting agencies who compile individuals’ credit reports.
How to get your free credit report
Each of the credit reporting bodies may have different information included on your report and it’s a good idea to get a copy from each provider so you have the full picture.
As well as getting one copy of your credit report for free each year, you can also request a free credit report if an application for credit was declined in the past three months. But you may be charged for any additional copies you request.
If your report contains incorrect information, you can request to have the info fixed or removed. But beware of companies promising credit repair services.
3. Keep on top of your repayments
Missing credit repayments or bills can have an impact on your credit report and score, making it harder or more expensive to access credit. Here are some simple ways to make sure you keep on top of things:
- Plan your budget – make sure you have enough money left over to cover your repayments, or simply pay what you owe first before spending.
- Automate your repayments – set up recurring payments or direct debits so you don’t run the risk of forgetting to make payments. Great Southern Bank members can do this using Online or Mobile Banking.
- Set reminders – if it’s a repayment that can’t be automated, set a reminder to make the payment manually.
- Keep your credit provider informed – (e.g. banks, credit unions, and businesses like gas and electricity providers who sell goods on credit) make sure they have up-to-date billing details and let them know if your circumstances change.
Remember, support is available for Great Southern Bank members who are struggling to keep on top of their repayments.
4. Avoid making too many credit applications
As mentioned above, all credit applications you’ve made in the last five years will be shown on your credit report, whether they were approved or not.
If your report shows many credit applications, it will impact your credit score and may be viewed negatively by future lenders, as they may worry that you are trying to get too many loans or have had lots of applications rejected.
To help avoid this, research credit products properly before you apply to make sure they’re right for you.
If you need more information or support with your credit health, Great Southern Bank supports CreditSmart, a website developed by credit experts to help consumers understand credit reporting.
Important information: Please note that this is only intended as a general guide in relation to issues you may want to consider when managing your credit health. It is not intended to be an exhaustive list of all relevant issues and does not take into account your personal needs and financial circumstances. You should take into account your own particular circumstances, and obtain independent expert advice where needed, before proceeding. Examples quoted are indicative only for illustrative purposes.