Understanding Your Credit File

| 27 May 2011

Understanding your credit file enables you to make more informed decisions regarding your finances.

Utilising the services of Veda, Australia's number one credit information provider for consumers, your file is also a tool credit providers use to help them ascertain your financial reliability.

A credit file includes information about you such as your full name, date of birth, driver's licence, gender and residential addresses and employer information.
A credit file has 3 distinct sections. These are:

1. Consumer credit information which may include:

• credit applications made in the past five years relating to loans for household, personal or domestic purposes.
• information that a credit provider is a current credit provider, that is, you have a current credit relationship with that credit provider (e.g. a credit card, home loan etc) details of overdue consumer credit accounts

Overdue accounts

• Overdue Accounts may be reported as a "payment default" or a "clearout".

Payment default

• A payment default is an account of $100 or more that is 60 days or more overdue. For example, if you have a telephone bill of over $100, and it was due more than 60 days ago, it could be listed on your credit file as a payment default.
• Payment defaults can only be included on your credit file if the credit provider has tried to recover some or all of the overdue amount. This means that they must have sent a notice in writing to your last known address that the amount was overdue and requested payment.
• Potential credit providers may look unfavourably on applicants with a history of overdue accounts, so it's a good idea to avoid defaults getting onto your credit file. To do this, you need to ensure you pay your bills before they become overdue.
• If an overdue account is listed on your credit file, the credit provider is required by law to update the listing, as soon as practical, once you've paid the overdue amount.
• A payment default stays on your credit file for five years, even when you have paid the overdue amount. The fact that an account has become overdue and then been paid becomes part of your credit history.

Clearouts

• A clearout is also sometimes called a "confirmed missing debtor".
• It means that, at the time of listing the person who owes the money could not be located despite attempts to contact them.
• Before you can be listed as a clearout, the credit provider must make reasonable efforts to contact you, either in person (including over the phone) or in writing your last known address, to pay the outstanding amount.
• If you can't be contacted, the credit provider can immediately list the debt on your file as overdue, even if it hasn't been overdue for 60 days or more.
• Clearouts remain on file for seven years from the date they're listed, even when you have paid the overdue amount. The fact that an account has become overdue and then been paid becomes part of your credit history.

2. Commercial credit information may include:

• credit enquiries pertaining to applications for credit for commercial purposes
• details of overdue commercial credit accounts

3. Public record information may include:

• court judgements and court writs
• directorship details 
• proprietorship details 
• bankruptcy information