A poor credit score or incorrectly listed information on your credit report could impact the loans you apply for. While it’s not that common, it is possible for your credit report to contain mistakes.
For instance, you may find a debt of a family member or someone with a similar name to yours listed on your file. Or, there may be an incorrect default listed on your file due to a processing error on the bill collector’s behalf. This may happen if you use third-party services to pay bills.
Other examples include a credit reporting agency forgetting to remove a default from your file that has run its course (defaults only stay on your file for five years) or somebody using your identity to apply for loans and utility services.
Is it possible to correct credit report errors?
Disclaimer
This article is over two years old, last updated on July 3, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent credit score articles.
How to fix errors on your credit report?
The easiest way to keep your credit report error-free is by checking it regularly for errors. You can request a free copy of your credit report from each of the three main credit reporting bodies – Equifax, Illion and Experian, once every year. You may also request a free copy of your credit report if some information has been corrected or you were refused credit in the last 90 days.
Once you receive your credit report, read it thoroughly to check whether all the loans and debts listed on your credit report are actually yours. If yes, you should confirm whether the listed amounts are correct.
It’s also important to go through the defaults listed on your report. A default could appear on your file if you have a debt of $150 or more, which is overdue by 60 days. A creditor must also inform you in writing before listing a debt as a default. Once a default is listed on your file, but you eventually pay it off, it should reflect as a paid default, which is again something you should keep an eye out for.
If you think there’s a mistake on your credit report, you can ask to have it changed for free by contacting the respective credit reporting agency. Here are some steps you can take to fix errors on your credit report:
1
Step 1
If you find an inaccuracy (like a typo in your name or address) or listing that you think is incorrect, you could request a correction from the credit provider or the credit bureau directly. For example, if there’s a default listed on a credit card that you closed several months ago, you could directly call the credit card provider to fix the error. Alternatively, you may decide to inform the credit bureau of this error directly.
Whether you decide to contact the credit provider or the credit bureau, it’s usually helpful to support your claim with some documentary evidence, such as payment records, to ensure a faster resolution.
2
Step 2
If you are not satisfied with the response of the credit bureau or the credit reporting agency, you may contact an independent complaints body, such as the Australian Financial Complaints Authority, or the relevant ombudsman in your state or territory. You could also complain to the credit reporting regulator, the Office of the Australian Information Commissioner.
Keep in mind that you won’t be charged anything by the credit bureau or the credit provider for removing any incorrect information that made its way to your credit report. You should thus be wary of companies that offer credit repair services for a charge.
The Australian Securities and Investments Commission (ASIC) warns you of companies and individuals who claim to get your credit score fixed. Only incorrect defaults can be removed from your file, and it’s something you can do yourself easily.
Simple tips to boost your credit score
Checking your credit score regularly can help you keep a tab on your financial health. If you find your credit score unusually low, it could indicate a mistake on your credit report. But if you find all the information on your file to be correct and your score is still low, it could help to analyse your financial behaviour to figure out the reason behind a low score.
At the same time, you can do some simple things to improve your credit score gradually, such as:
- Automate your repayments
Setting up automated payments can help you avoid an unintentionally missed payment and protect your credit score. Late payments can pull down your credit score, especially if you tend to forget your payment dates frequently. You can set up a direct debit with your credit provider or set a recurring reminder on your phone to eliminate this situation. This will help you make your payments on time by relying on something more than your memory and help protect your credit score. - Pay more than the minimum amount due on your credit card
It’s tempting to pay the minimum repayment amount on your credit card each month and move on. However, have you ever wondered what this does to your financial health in the long run?
Paying the minimum amount due on your credit card will not hurt your credit score, but you’ll accrue significant interest charges over time as your balance owing isn’t getting reduced. On the other hand, paying just a little more than the minimum repayment amount can help you pay off your debt faster, which not only looks good on your credit report but also reduces your risk of defaulting on a payment in future. - Avoid multiple credit applications
It’s advisable to avoid making multiple loan applications in a short period. Each credit application you make (and its result) appears on your credit history, which could make you appear credit hungry or unreliable to future lenders.
If you are applying for a credit product, it’s worth doing your due diligence to ensure you meet the eligibility criteria for the product to avoid having your application rejected. For instance, if you are applying for a home loan, you could start by using an online calculator to check your borrowing capacity so that you only apply for a loan amount that’s serviceable to reduce your risk of being rejected.
In case your application for a credit card or loan gets rejected, it may help to wait it out for some time and fix the reason for rejection (such as a low credit score or incomplete documentation) than applying for another credit product immediately without finding out why you were rejected in the first place. - Pay your existing debts on time to build your credit score
If you have a home loan or use a credit card regularly, make sure you make all your payments on time to demonstrate positive financial behaviour. Since the introduction of the comprehensive credit reporting system, both positive and negative information is listed on your credit file, which means using credit responsibly could help build your credit score. As mentioned previously, it’s also important to check your credit report regularly for any errors that may have crept into it and might be pulling your score down.
Questions you may have
How will debt consolidation affect my credit score?
Debt consolidation can affect your credit score, but a lot depends on your ability to repay the debt. Having too much debt, especially spread over different kinds of credit, can increase your chances of defaulting or failing to repay the money you owe. Consolidating your debts into a single credit product - at a possibly lower interest rate - is one way of lowering this risk. By paying off your debts, this positive behaviour may show on your credit report and you you may be able to boost your credit score. This is provided you can make timely repayments and not take on additional debt.
From a credit reporting bureau’s perspective, lowering the number of debts and reducing your overall indebtedness is seen as a positive move. To ensure the consolidation loan does not hurt your credit score, you may want to consult a financial advisor before starting the loan application process.
Can I check my credit score without a driver's licence?
In Australia, your driver’s licence is the preferred identification document among credit reporting bureaus.
Most companies that can provide you with your credit score accept some alternative forms of identification, primarily your passport or Medicare card. However, the recommended document is a valid Australian driver’s licence.
It’s highly unlikely that you’ll be able to confirm your identity using other documents, such as a proof-of-age card.
You’ll also need to provide valid personal details such as your name, date of birth, and residential address. If you’ve lived in your current residence for less than six months you may also need to provide previous home addresses.
You may have genuine reasons for not wanting to provide your licence details, such as concerns over identity theft. Some credit reporting agencies offer packages, at a cost, that include insurance against identity theft. Such packages may also include monthly credit score checks or alerts whenever your score is updated.
If you don’t have a driver’s licence, there’s a good chance that you haven’t applied for credit in the past and don’t have a credit score at all.
Can a debt collector affect your credit score?
When a creditor is unable to contact you by phone or by sending you a formal notice in regards to outstanding debt, they will often outsource the job to a debt collector. The debt collector can try to reach you by phone, or they can attempt to contact you face to face. If they cannot get through to you by either method, they can only report back to the creditor but not directly report a payment default to the credit rating agency. So, can debt collectors affect your credit score? No, they cannot do so directly.
However, if you owe money, you have an obligation to return it or communicate your difficulty in doing so to the creditor as well as to any involved debt collector. If they cannot contact you, they can report a serious credit infringement against you, which may affect your credit score for many years. Creditors can also take the legal route, and a court judgment against you can also severely impact your credit score.
You should remember that debt collectors need to abide by specific rules and cannot harass you by repeatedly calling or visiting you, or by threatening to confiscate your possessions if you don’t pay up. Similarly, they cannot threaten to file a default against you, especially with a credit bureau.
Does borrowing money affect credit score?
Whether it’s through a home loan, a personal loan, or a credit card, borrowing money will affect your credit score. Taking on a home loan or a credit card may have a positive impact on your score, but too many loan applications can bring your credit score down.
Every time you apply for credit, an inquiry is performed against your name. Too many inquiries can reflect negatively on your credit report, and if your loan application is rejected it will negatively impact your credit score.
How you handle your debt can also make a big difference. As long as you make timely payments you may be able to improve your credit score and overall creditworthiness. However, any missed or delayed payments will likely result in a negative impact on your credit score.
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Product database updated 24 Nov, 2024
Fact Checked
This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.
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