How to check your credit rating

How to check your credit rating

Applying for a home loan, credit card or mobile phone card?

Whatever type of loan or credit you apply for, the decision to approve or reject your application can come down to your credit score (or credit rating, as it is also known).

If you want to find out your credit score, click here.

If you’ve got bad credit and want help, click here.

What is the point of credit scores?

Lenders and credit providers may use your credit score to determine:

  • Whether you can afford to pay off a loan
  • How reliable you will be in making your repayments

So credit scores are important. As a general rule, the better your credit score, the easier you’ll find it to get a loan.

Struggling with debt?

If you’re struggling with debt, you can make a free call to the National Debt Helpline, on 1800 007 007. You can also get free financial counselling. If you’re facing legal action because of your debts, you may be able to get free legal advice.

How are credit scores calculated?

Your credit score is based on your financial behaviour and includes information on your credit cards and loans, including your punctuality in making repayments.

Under the ‘comprehensive credit reporting’ regime, which was introduced in March 2014, credit scores are based on both positive and negative events (as opposed to the old system, which only reflected negative events).

Click here to read more about comprehensive credit reporting.

Positive credit events Negative credit events
Paying your rent on time Not paying your rent on time
Making scheduled loan repayments Missing scheduled loan repayments
Closing loans Defaulting on loans
Having one credit card with a moderate limit Having multiple credit cards with high limits
Paying off your entire credit card debt each month Paying off the minimum credit card debt each month
Not making any unsuccessful credit applications Making any unsuccessful credit applications

What’s your credit score?

If you want to find out your credit score, click here.

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Are credit scores always accurate?

Credit scores are based on the information in your credit file – so if there is incorrect information in your credit file, your credit score may be inaccurate.

Here are some possible inaccuracies that can appear in credit files:

  • Your biographical information might be wrong (such as date of birth)
  • You might have an excessive debt listed against your name ($450,000 instead of $45,000)
  • You might have a debt falsely listed against your name (the debt might actually belong to a family member or a stranger with a similar name)
  • You might have a default falsely listed against your name (the default might have been committed by someone else, or there may not have been any default at all)
  • A fraudster might have taken out credit in your name

What are credit repair agencies?

There are companies, known as credit repair agencies, that offer to fix people’s credit files in return for a fee. Some credit repair agencies are reputable; others exploit vulnerable consumers. ASIC, Australia’s financial services regulator, offers this advice:

  • You don’t need to pay a credit repair agency to remove incorrect information – you can take steps to do it yourself for free
  • Credit repair agencies can’t remove correct information
  • Credit repair agencies may charge excessive fees
  • They may pressure you into entering a service you don’t understand, such as a Part 9 Debt Agreement

How do I fix my credit file?

There are several steps you can take if you want to fix mistakes in your credit file:

  • Contact the credit provider and ask them to fix the mistake
  • Contact the credit reporting bureau and ask them to fix the mistake
  • Take your case to the ombudsman

Please note that you can only fix mistakes. You don’t have the right to demand the removal of correct information from your credit file.

What’s your credit score?

If you want to find out your credit score, click here.

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Learn more about credit cards

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.

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

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

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.

How to get rid of credit card debt

  1. Calculate your debt. Credit card calculators make it easy to determine the repayments required to chip away at your debt in the shortest timeframe possible for your budget.
  2. Repayment plans. Take some time to formulate a credit repayment plan. Consider increasing your income, scaling back your lifestyle or refinancing.
  3. Talk to your credit provider. If you’re still struggling with your debt, give your credit provider a call. You may be able to come to a new arrangement.

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.

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.

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

What's the best credit card for rewards?

There is no one-size-fits-all best rewards credit card. It's best you research what type of rewards program you'd like, as well as the fees, interest rate and conditions associated with those types of cards before making a choice. 

Rewards credit cards can also come with high annual fees that may end up nullifying the rewards, so think how often you use the card to decide whether the benefits outweigh the extra cost for you. A card with a lower annual fee might require a lot of spending to get any useful rewards, while another card with a higher annual fee might need fewer purchases to get a reward. 

How many numbers are on a credit card?

The numbers on your credit card actually follow a universal standard which is used to identify specific functions. Each credit card has a different amount of numbers. Visa and Mastercard have 16, American Express has 15 and Diner’s Club has 14. 

The first number on a credit card always identifies what type of credit card it is. Visa cards start with a 4, whereas Mastercard starts with a 5 and American Express with a 3. The remainder of the digits represent the account number, including the last number which is used to verify that your credit card is actually valid. 

Credit cards also have additional verification numbers, which are mainly used when the card isn’t present for phone and online purchases. These are the three-digit numbers on the back of Visa and MasterCard or the four-digit numbers on the front of an American Express card.

How to make a credit card online

If you’re wondering about how to make a credit card online application, here are some steps to follow:

  • Test the market. Many credit card options are available online. Compare providers by fees, interest and perks to ensure you’re getting the best deal.
  • Complete the application. Once you’ve selected a card, head to the provider’s website and complete the online credit card application form. Forms vary by providers.
  • Provide details. Most cards require you to meet age, residency, income and credit status condition, and you need to provide details like a bank account statement to prove this.
  • Review details. Ensure the information you’ve entered is correct.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

What is CVV on a credit card?

CVV stands for ‘card verification value’, and is also sometimes referred to as a CVC or card verification code.

A CVV code is usually needed when the card is used online or over the phone as an anti-fraud measure. Without the cardholder being physically present to sign or verify the purchase, the CVV provides an extra layer of protection. 

If you’re using Mastercard or Visa, the CVV is the three digits located on the back of the card. If you’re using an American Express, the CVV is usually four digits and is on the front of the card.