Credit scores can be scary – after all, that one number defines many important life and financial decisions, and many do not take the time or effort to monitor their credit score and make life easier for themselves. While the thought of looking at a credit report may inspire some fear or trepidation, this post aims to temper that and examine how staying on top of your credit report can help benefit your credit score.
First things first, let’s examine what a credit report usually contains. An average credit report examines your debt and payment activity – usually based on loans, credit cards and payments and then takes all of these payments to create an average score. This score indicates to lenders whether or not you are a reliable and trustworthy borrower, as it demonstrates your fiscal responsibility.
Veda, Australia’s largest credit bureau, is also included in many credit reports. Vedascores range between 0-1200, with good scores ranging from 600 onwards. The VedaScore is another tool lenders use to assess credit applications regarding loans or more lines of credit.
However, it is imperative to note that credit reports are not foolproof by any means. They must be examined carefully, as errors can and do occur. There might be incorrect information on the length of time credit has been established or payment errors. Some of the more common errors include:
1) Misleading information
As mentioned earlier, credit reports can sometimes be erroneous and may contain misleading information. This could include errors regarding the number of credit lines established, wrong payment dates and/or any other information that could paint a misleading picture for lenders evaluating your application.
2) Duplicate entries
Many credit reports may also contain duplicate entries, which could also paint a harmful picture in credit applications. Perhaps payments or amounts are being displayed and calculated twice or are being displayed incorrectly. It could lead to a harmful credit application as it may display financial irresponsibility to lenders examining the report.
3) Incorrect listings
There is also a high probability that credit reports may contain information that lists credit that you simply do not have, or may list incidents that occurred while your identity was stolen if that has happened in the past.
Some credit reports may attribute incorrect listings to your credit report, thereby impacting your score and credit applications. Other errors may also include simple administrative or clerical details that need to be amended or changed. This ranges from incorrect birthday dates, old addresses that may need to be updated, or other small errors that can be easily fixed.
It is imperative to read credit reports very carefully when they are received to ensure no erroneous information is displayed. Make sure to go through each component carefully and thoroughly to ensure that credit report errors do not negatively impact your credit application.
If you do identify errors in your credit report, they should be easy to rectify. The first step is to identify the credit provider that has supplied the incorrect information or details and contain them immediately to begin the process. You can also contact the relevant credit reporting body to correct errors.
Luckily, credit reports can usually be obtained free of charge. Providers such as Experian, Veda and GetCreditScore are just a few resources to look at when it comes to receiving your credit report. You are also entitled to receive a free copy of your credit report once a year, if you can wait 10 days from the date you requested it. This can be done through the Australian Securities and Investments Commission website.
Credit reports and scores are not beyond reproach and should not be feared. Maximise and take control of your financial future by speaking with a friendly Ezilend consultant today!