How information on a credit report is used
Many credit providers use credit reports to decide whether to provide a loan or service. Should a credit application be denied because of information on a credit report, the credit provider should tell you this.
Credit reports can only be seen by credit providers, potential credit providers, mortgage insurers and credit reporting agencies. Other types of businesses, such as real estate agents, cannot access credit reports.
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Credit providers sometimes use credit scores (or credit ratings) to decide whether to provide credit.
A scale (excellent, very good, good, average, or below average) helps a lender work out credit risk. A higher score could mean getting a better deal and saving money. A lower score may prevent a person from getting a loan or credit.
The reporting agencies calculate credit scores differently, so there is not one official score. Lenders may also have their own internal methods of scoring customers.
Credit scores are generally calculated from things like the amount of money borrowed, the number of credit applications made, and whether repayments are made on time. A credit score cannot be calculated based on financial hardship information.
Credit scores change over time.
How information on a credit report is used
Chapter: 5.9: Credit reporting
Contributor: Stephen Nowicki, Director of Legal Practice, Consumer Action Law Centre
Current as of: 1 September 2024
Law Handbook Page: 403
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