What are the credit reporting bodies?

Your credit score is calculated by credit reporting bodies or agencies after compiling information about your previous lines of credit, repayment history, credit inquiries, and more. These credit reporting agencies collect and maintain credit information from lenders you use for loans, mortgages, credit cards, and more.

The goal is to measure your creditworthiness and assess how likely you are to repay the credit on time.

Let’s take a look at how credit reporting bureaus work and why they are so important.

Credit reporting or comprehensive credit reporting refers to credit providers reaching out to credit bureaus to obtain your credit reports and determine your creditworthiness, either for pre-approved offers or for new credit applications you have submitted. It is an objective assessment of your eligibility to borrow credit and your capacity to repay the amount.

Credit reporting refers to the process through which credit reporting bodies collect your credit information and history. Each credit reporting body receives this information from lenders, compiles it into credit reports and assigns you a credit score.

The data in credit reports by credit reporting agencies can include details about:

• Commercial/consumer credit borrowed
• Repayment history
• Credit inquiries
• Payment defaults
• Serious credit infringements
• Consumer credit liability information
• Personal insolvency or bankruptcy details
• Personal identification details such as name, address, driver’s licence, and date of birth

As a rule of thumb, the healthier your credit history is, the higher your credit score, which makes you a suitable candidate for additional borrowing.

All of these data points are then assessed to calculate your credit score. Take a look at how the credit score is calculated.

Credit bureaus are companies that create and keep hold of your credit reports. They gather information about your credit history and put this into a credit report to calculate a score. Lenders then ask one or more of these agencies for information about you before accepting your credit application.

Each credit reporting body is sent information by lenders about the credit you have and how you manage it. Once a credit reporting body has enough information on you, they will generate your credit report and calculate your credit score.

It's important to note that each credit reporting body may have a different way of compiling credit history and calculating the credit score.

How many credit agencies are there?

Australia has three credit rating agencies: Experian, Equifax, and Illion (formerly Dun and Bradstreet). These credit bureaus gather information about your credit history and assign you a credit score.

Each credit check company collects information about borrowers through different sources. The score is assigned through a credit scoring model and each credit bureau in Australia uses a unique model.

Therefore, credit reports prepared by them are different as well. Moreover, not all lenders report to every credit bureau in Australia. For instance, some lenders may only provide information to Experian and Equifax while some may report it to all the credit reporting agencies in Australia.

Your credit score also varies depending on which credit check organisation has scored you. Each agency follows different credit score scales and algorithms to quantify your personal credit history.

For example, Equifax scores your credit history between 0 – 1200 whereas Experian and Illion grade it between 0 – 1000. It is possible that your credit score might be 909 with Equifax, 939 with Experian, and 845 with Illion for the same credit information.

Here’s a detailed breakdown of the credit score ranges followed by different credit bureaus in Australia:

Lastly, the time frame for collecting the information also impacts your credit score. Most credit bureaus conduct credit reference checks at different points in time. As a result, your credit score may keep varying not only between different agencies but also keep changing within a single agency.

It is also worth noting that since none of the credit bureaus provide details on how they calculate your credit score, comparing the credit scores assigned is not useful. In other words, if Equifax scores you 740 which falls within the ‘very good’ range, you cannot assume that Experian or Illion will also score you the same. Moreover, a credit report from any credit reporting agencies in Australia only represents a part of what is considered relevant by credit providers when you apply for credit. They may also take into consideration additional information in support of your application.

As long as your credit information is accurate, different credit scores from a different credit reporting agency in Australia won’t impact your creditworthiness.

The time frame depends on the type of information collected and the type of credit reporting agency assessing you. For instance, personal information such as date of birth, gender, driver’s licence, and address history appears on your credit report for your lifetime.

Details of serious credit infringement such as overdue accounts may appear for seven years from the date of listing while details of repayment history may only appear for two years from the date of listing. Information related to payment defaults and bankruptcy may last for five years from the date of listing.

It's recommended to perform credit rating checks regularly in order to understand where you stand as a credit borrower. It can also help you get a better idea about how likely you are to get approved for a new line of credit.

Checking your own credit reports in Australia is considered as a soft inquiry and it doesn’t affect your credit score in any way. But applying for new lines of credit is considered as a hard inquiry by Australian credit reporting agencies and getting rejected too many times can subsequently affect your credit score.

As a result, it's important to carefully consider your credit reports and assess the eligibility criteria of the new credit products you are applying for in advance.

Online providers such as ClearScore offer credit score reports completely free of charge to make the whole process easy for you. The credit reports get directly emailed and they give you clear insights about your credit score and you can subsequently improve your score.

Along with your credit rating, the credit report also includes details about your credit enquiries

Apart from credit score, it includes inquiries, the number of accounts you have, and even bankruptcy details, if you have recently filed for one.

Here is how you can check your credit report in Australia:

1 - Create an account on ClearScore

2 - Provide details like your name, date of birth and address

3 - Verify your identity by adding the registered number of your passport, driver’s license, or medicare

4 - Get your free credit report emailed directly to your and check your credit information right away

Credit providers who you have applied credit for, including banks, credit card companies, telecom companies, and even utility providers can check your credit report.

Though it's important to note that not all the information in your credit report can be accessed by everyone. Telecom companies and utility companies are not licensed credit providers because of which details like your payment history may not be visible to them.

But licensed credit providers like banks and other financial institutions can check all the information in your credit report. Moreover, only mortgage and trade insurers can see your credit report.

There is a detailed log provided in your credit report which lists details of everyone who has accessed your report recently. If you believe someone has wrongly accessed your credit report, you can file an official complaint against them with your credit reporting agency.

Every credit reporting body merely collects information and compiles it to create a credit report. All information is considered correct at the time it was provided and it is only up to date as your last application for credit.

So if there have been any changes since the information was provided or there is any incorrect information in your credit report, you can get in touch with the respective credit reporting bureau for correction. You will need to point out the exact piece of data that is erroneous, proof of such error, and what the correct information should be.

Usually, credit check companies do not levy any fees for making such corrections.

It is advisable to check your credit score regularly to get a good idea of your overall financial situation. While each credit reporting agency in Australia may have a different score for you, they more or less follow the same principle – The higher the credit score, the better.

With ClearScore, you can access your credit report for free and analyse how you can subsequently improve your credit score.