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How much do you know about your credit history?

How much do you know about your credit history?

If you’ve ever paid a bill late or missed a payment by its due date, then you’re not alone. New research shows one in 10 Australians has found themselves doing just that.

But what many may not realise is that ‘defaulting’ on a bill payment, as it’s also known, may lead to a mark on their credit file, which can come back to bite later in life.

The consumer research study, commissioned by RateCity, has revealed that young Australians are most at risk with 70 percent of defaults having occurred before age 35 and nearly two-thirds before age 30.

RateCity’s money commentator, Ali Cassim, said the results are worrying and suggest that many young people are unaware of the consequences of failing to make a bill payment on time.

“The research has also shown a trend towards a credit-based society as young Australians are taking on debt earlier than previous generations did,” she said.

“More than half of Australians under the age of 35 said they took out a credit card before they turned 25, compared with just 10 percent of baby boomers. We’re certainly seeing a trend to young people and plastic – clearly, a sign of the times.”

Debt life sentence?

The study also found that one in five Australians who had suffered a default still hadn’t recovered financially, and the impact was more severe for young adults, with 25 percent of people aged 18 to 24 saying they still hadn’t found their feet financially.

“What we’re seeing is that Australians who have had a financial blip are really struggling to overcome that, and, in many cases went on to further financial difficulty as a result,” said Cassim.

“Half of the people we spoke to said that a default had led to further money troubles, and again the 18 to 24 year olds were the most affected with three-quarters saying they suffered further financially.”

Incidents like this can impact your credit history, a record of your interactions and experiences with credit and debt, both good and bad. And, given those worrying results, it raises the question – how much do you know about your credit history?

What is the significance of a credit history or report?

Every time you apply for some kind of credit – whether a credit card or a brand new home loan – the lender will carry out a credit check on you. They want to make sure you’re a reliable borrower who will pay back their debts or, if not, adjust the terms of the loan accordingly. 

As part of this, they will pull up your credit history and examine it. Based on what’s gone on in your financial past, future creditors may decide to:

Deny you the loan, based on concerns raised by the report. 
Adjust the loan – perhaps by putting on a higher interest rate – because you’re a riskier borrower.
Approve the loan, as your credit history is spotless. 

Just think: You could go to all the trouble of carrying out a credit card comparison and painstakingly narrowing the options down to a single product, only for the credit provider to not even approve your application. 

What kind of information appears on your credit history?

Apart from your basic personal details, your credit report lists a number of pieces of information about you (which, consequently, affects your credit worthiness):

  • The credit cards under your name
  • Overdue or unpaid debts that were since settled
  • Defaults, which happen when payments are more than 60 days late
  • Credit applications (meaning that, if you apply for a car loan, it could influence your ability to secure a mortgage)
  • Repayment history, a relatively recent addition that lets credit providers view your success at meeting credit repayments on time 
  • Bankruptcies, personal insolvency agreements, court judgements and more, that are in your name

In other words, your credit history creates a fairly detailed portrait of you as a borrower, and indicates to the lender whether or not they should put their faith in you paying them back. 

Improving your credit history

A black mark on your credit history will be there for a while – five years, in the case of defaults and personal insolvencies, though longer is possible in some circumstances. You won’t be able to scrub these from your record – but there are other things you can do:

If there’s an incorrect listing on your report, you can undertake ‘credit repair’ and get it removed, either by contacting the credit reporting agency or notifying the creditor.
Credit reports nowadays record positive credit behaviour – so if you have a solid track record of making repayments on time and in full, it can benefit you, particularly if your instances of past credit impairment are relatively minor, so a missed bill payment doesn’t have to be a life sentence.

If you want to take a look at your credit report – which should be as normal as doing a home loan comparison – you can request a copy from a credit reporting agency. Just be aware that you’re entitled to only one free copy a year. Then, you can thoroughly check the information and not only correct any listings, but also know where you stand in terms of how a lender will look at you.

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Learn more about credit cards

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How to increase my Commonwealth credit card limit?

Commonwealth Bank credit cards are extremely popular in Australia for everyday purchases and big ticket items alikers. A number of the card’s functions can be customised, depending on your needs and desires. If you wish to increase your Commonwealth credit card limit using the CommBank, you can usually do so on the app or via NetBank.

In the CommBank app, tap on the ‘Cards’ icon and choose your credit card. Then, click on ‘Credit Limit’ and select the ‘Increasing your limit’ option. If you don’t have the CommBank app, you can also increase your Commonwealth Bank credit card limit through NetBank. Simply log on and go to Settings, then click on ‘Product Requests’ and then choose ‘Credit Card Limit Changes’. 

Once the bank has received your application, they will review your account and payment history. Based on this assessment, your application will either be approved or denied. If approved, your new limit will be applied to your card instantly. 

While increasing your credit card limit may be an easy process, it’s important to remember that you should only request limits that you can manage. A high limit increases the risk of having a larger debt, even with cards that provide low-interest rate options. So, it’s important to think carefully and seek advice from people you trust before increasing your Commonwealth Bank credit card limit.

Can I transfer money from my American Express credit card to my bank account?

If you’re an American Express credit card customer, you may not be able to transfer money from your credit card to your bank account. However, you may be eligible for cash advances, which involves withdrawing money through an ATM. 

To qualify for a cash advance, you’ll likely have to enrol for American Express Membership Rewards. Consider checking your online credit card account to see if you can withdraw a cash advance and, if so, the fees and charges you’ll incur for this transaction. 

You should remember that cash advances are different from balance transfers, which were available with some American Express credit cards earlier. Balance transfers allow customers to consolidate debt from high-interest credit cards to a credit card offering a lower interest rate. If you only recently applied for an American Express credit card, balance transfers may not be available irrespective of the card you own. 

Does Woolworths Qantas offer any credit card insurance?

Credit cards can be useful for managing your expenses, but they also come with other advantages like credit card insurance. Your Woolworths Qantas Platinum Credit Card may offer a host of complimentary insurance options, which include: 

  • Travel insurance: Cover for your whole family when they travel with you, with unlimited overseas medical emergency cover and $500,000 accident insurance for accidental loss of life.  
  • Purchase security insurance: If you purchase an eligible product with your Woolworths Qantas Platinum Credit Card, the cost of theft or damage that occurred within 90 days of the purchase will be covered, provided the amount doesn’t exceed the purchase price of the item or up to $2500 per event. 
  • Extended warranty insurance: If you purchase eligible goods with your Woolworths Qantas Platinum Credit Card, this complimentary insurance will extend the manufacturer’s Australian warranty by up to 12 months. 
  • Global hire car excess waiver: If you’re legally liable to pay an excess or deductible in the event of loss or damage to a rental vehicle that was booked using your Woolworths Qantas Platinum Credit Card, the costs will be covered. 

To find out more about Woolworths Qantas credit card insurance, you can call them on 1300 10 1234. 

What types of NAB credit card insurance are available?

If you hold a NAB Premium, Platinum or Signature credit card or a NAB Platinum Visa Debit card, you could be eligible for the bank’s free travel insurance. You may be covered for overseas travel and interstate flight changes, along with transport accidents, domestic hotel burglary, purchase protection, extended warranty and price protection. 

It’s important to note that the NAB credit card insurance only kicks in after you’ve made an eligible purchase, so you won’t get the credit card insurance benefits if you haven’t used the card.

To make a NAB credit card insurance claim, you can send an email to cardclaims@allianz-assistance.com.au. You can check the eligibility of your claim or make a claim online as well.

If you have a travel incident and need to speak to someone regarding your NAB credit card insurance, contact 24x7 Emergency Assistance on +61 7 3305 7499 (reverse charges may apply). You can also send an email to medical@allianz-assistance.com.au.

 

How can I increase my credit card limit on my American Express card?

If you want to increase the credit limit on your American Express (AMEX) credit card, you will need to apply through the AMEX Online Services, or by calling the number on the back of your card. You may need to share personal information that the bank can use to assess whether the requested limit is suitable for you and your current financial status. Once your application is approved, your new limit will be ready for use within an hour.

Why do different credit reporting bureaus use different scores?

The reason Equifax, Experian and Illion use different scores is because they are independent companies with their own different methodologies. As a result, a score of, say, 700 would mean different things at different credit reporting bureaus.

However, the one thing they have in common is that they divide their scores into five tiers. So if you receive a tier-two credit score from one bureau, you will probably receive a tier-two score from the others, as well.

Can I get a credit card on part-time/casual work?

Yes, as credit card providers look at your annual income amount as well as your occupation. Minimum income requirements tend to be between $30,000 – $40,000 for standard and rewards credit cards, however low income credit cards can have minimum income requirements as low as $15,000 per year.

What happens if I have a bad credit score?

If you have a bad credit score, you might encounter two main problems. First, the lower your credit score, the more likely you are to be rejected when you apply for a loan or any other credit product. Second, if your application is accepted, the less likely you are to qualify for the lowest interest rates.

Why should I check my credit rating?

There are two reasons you should check your credit rating: so you have a better understanding of your financial position, and so you can take action (if necessary) to improve your credit rating.

Lenders use credit ratings or credit scores to assess loan applications. The higher your score, the more likely you are to get approved, and the more likely you are to be charged lower interest rates and lower fees. Conversely, the lower your credit score, the less likely you are to get approved, and the more likely you are to be charged higher interest rates and higher fees.

What type of complimentary travel insurance is available with Citibank credit cards?

The Citi Prestige, Premier, Rewards, Emirates Citi World MasterCard, and Gold cards provide complimentary travel insurance to customers. These Citibank credit card insurance benefits are managed and issued by Allianz Global Assistance (AGA).

Depending on the type of card, the Citibank credit card insurance coverage may include:

  • Foreign travel insurance
  • A comprehensive insurance policy for foreign travel for up to six months
  • Transit accident insurance
  • Accidental injury or demise while travelling on aeroplanes, buses, trains, or ferries in foreign locations
  • Interstate flight inconvenience insurance
  • Cover for unexpected cancellations, damaged or lost baggage, flight delays, or rental vehicle excess expenses for up to 14 days while travelling within Australia.

To be eligible for the complimentary Citi credit card insurance, you must book tickets using your card or through the Citi Travel Program.

Can I use PayPal to transfer from a credit card to a bank account?

You can easily link your credit card to your PayPal account. When you need to make a payment, PayPal makes an instant transfer from your bank account, provided you’ve linked and confirmed your credit card details.For credit card holders, you can transfer funds from eligible cards listed in the “Instant” section of the money transfer page.

Here is how you can transfer money from PayPal to your bank account:

  1. On the “My Wallet” tab, select “Transfer Money” and then click on the “Transfer to your bank account” option.
  2. Choose the bank account where you want to transfer the money and click “Continue.”
  3. Enter the amount, review and click “Transfer Now.”
  4. When you confirm the transfer, the amount should be moved to the bank account linked from the chosen credit card.

How do I transfer money from my Commonwealth bank credit card to my bank account?

Your Commonwealth bank credit card may include a cash advance benefit, but you won't be able to transfer money to your bank account. 

You can, however, withdraw cash from your credit card at an ATM. You should remember that you have to pay a fee for such transactions, and you’ll be charged interest from the day you withdraw the cash. 

Unlike other credit card transactions, you don’t get an interest-free repayment period for cash advances. Also, you may not be able to access your full credit card limit for a cash advance.