Every individual has a personal credit file available to be viewed at any time by credit lenders. There are two main credit reporting agencies in Australia, VEDA Advantage and Dunn & Bradstreet.
There are two main components to your credit file:
CREDIT ENQUIRIES- Any time you apply for a service that has an element of credit (mobile phone contracts, home loans, furniture or appliance rentals, cash loans) an enquiry is listed on your credit file. Having an excessive amount of enquiries can be as detrimental as having credit defaults on your credit file. Think about it, if you were deciding whether to lend money to someone and saw that they have made enquiries at five other lenders in the last week, would you lend to them? Most creditors would not, as it shows that it is likely you have not met lending criteria to other lenders and you are likely desperate for this money.
CREDIT DEFAULTS- Credit defaults can be listed by creditors at any time you have operated outside of the original contract terms for your debt. There are four categories of credit defaults
Current – You have had a credit default listed by a creditor within the last five years. The amount of your debt and the original date this default was listed will be shown. After five years from the original date the default will be removed from your credit file.
Paid – You have had a credit default listed by a creditor within the last five years. You have since paid this debt in full. The listing will be removed five years from the original date the default was listed.
Settled – You have had a credit default listed by a creditor within the last five years. You have since paid this debt off but at a reduced settlement amount. The listing will be removed five years from the original date the default was listed.
Serious Credit Infringement – You have had a default listed by a creditor within the last seven years and you have avoided contact from the lender to pay your debt. This may have a significant impact on your ability to apply for credit in the future. This listing will be removed seven years from the original date the default was listed.
