Data from CreditSmart found that almost half of all Aussies have never checked their credit report, despite about 85% holding some sort of credit product like a home loan, a credit card, or BNPL.
That seems to have led to many people misunderstanding how the credit reporting system works, with less than a quarter of survey respondents aware that credit reports contain information on repayment history.
There might be plenty of details the average punter isn't aware are recorded by the credit reporting bureaus, and CreditSmart's Elsa Markula is urging Australians to be proactive in periodically checking in on their own credit health.
"Your credit report is going to tell you things about you and your credit health," she told the Savings Tip Jar podcast.
"There'll be information there about...your credit accounts, whether you've been making payments on time, if you've fallen behind with payments, how bad it [was], have you had a default bankruptcy court judgement."
Ms Markula said people can check their credit report for free once every three months via reporting agencies illion, Experian, and Equifax.
See Also: Credit Scores & Reports Explained
See Also: Credit Score Estimator
Dealing with credit reporting errors
One of the biggest reasons why checking your report is important is that there could be wrong information on there - either innocent mistakes or through fraud or identity theft - which can impact your ability to get things like home loans in the future.
Laurence Barlow, CEO of Credit Reboot, told Savings.com.au these kind of mistakes are very common.
"Out of the thousands of credit files we have reviewed, very few are without errors of some kind," Mr Barlow said.
"It's getting much better with technology upgrades, but far from ideal."
Ms Markula recommends Aussies who want to check whether they are affected consult the CreditSmart organisation website, which features sample credit reports and explainers.
"You need to understand what's actually on your report if you're deciding if it's right or wrong because you don't want to be spending time disputing something because you don't like it when it's actually accurate," she told the podcast.
If there does end up being a problem, the credit reporting agencies have to provide a response within 30 days of being notified.
These cases can be escalated to AFCA if there isn't a resolution, while credit repair companies like Credit Reboot also can advocate on your behalf.
"Many consumers believe there is no cash compensation, but AFCA awards thousands each month for [credit reporting] breaches," Mr Barlow said.
Read more: What to do if there are errors on your credit report?
How to fix your credit score
Alternatively, your poor credit score might be entirely accurate - if you've missed loan repayments in the past or defaulted on a credit product, your credit history might be standing in the way of your borrowing prospects
This can be more difficult to address than reporting errors, but Ms Markula reminded those affected that adverse credit events aren't a life sentence.
"Your payments will stay in your report for two years; if you have a default ... that will stay on your report for five years, but even if you have had a blip and then you get things back on track, over time you will get into a better position," she told the podcast.
Read more: Can you improve your credit score?
Picture by Scott Graham on Unsplash
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