Credit report

So I know I probably should have looked at this some time ago. But anyway...

I recently got hold of a copy of my credit report from Veda. I'm a little confused.

The only information on that report was credit applications that I had made over the last few years. There was no information as to how much I owed, whether, when and by how much I had ever been late (I'm pretty good but mistakes regarding due dates etc have been made in the past). There was certainly no information about any late bill payments.

So, as I've never defaulted, is the only info they have on me credit applications?

 

Yep

 

Lenders use this as one reference point to verify your application against. If you'd defaulted on loans or bills, they would also appear on there.

Many people look at the credit score Veda gives them but it's not as relevant as they think. Lenders have their own credit scoring system which takes into account what's on your credit report, but also everything else the lender knows about you. They do their own scoring and they usually have access to a lot more information than Veda does.

 

So Veda is basically useless? What if the bank has incorrect info?

 

Millions at risk of default in next 12 months but don't know it

 

The article seems to contradict what was on my report. I've been late paying bills before, that article is claiming that it will show up on my report?

The reason I am really concerned is because Optus is chasing me for a debt that is not mine (another story). I wanted to check that they didn't list anything against my name.

 

What lot more information ?

 

For starters everything in your application. How often you've moved address or job, what you do for a living, how much you earn compared to your job description and how long you've been doing it, your debt to asset ratios.

Then consider your history with the bank. A late payment doesn't go on your credit report, but the bank remembers everything that ever happened on your accounts, credit cards, loans. They know how often you shop and where, your spending habits.

From a risk perspective, your bank knows more about you than you know about yourself.

 

I don't really understand the relationship between credit score and the true risk of default as opposed to the statistical risk of default as calculated from an arbitrary score

 

Do whatever you can to sort out the problem with Optus ASAP..
If they list it on your credit file it will really adversely affect any future credit applications...plus it will be a nightmare to prove and get removed..

 

Sorry to hijack

So... I've lived overseas for almost 10 years (Aus Citizen) and my Veda report is absolutely blank.

Is it a good idea I just open a $5k limit credit card account (no fees) when I visit Australia to 'build' my credit record?

If I don't make any transactions but have an active credit card does it still build on my score?


I am looking at purchasing in the next year or two so appreciate your advice.I assume having a blank credit record might be a red flag to increase the pricing I may get?

 

Won't do anything to improve your credit report. The best credit report is one that's blank. Everything else is still potentially a negative.

There has been moves to introduce positive credit reporting, but so far nobody actually appears to be implementing it.

 

Interesting, I would have thought having a very clean credit history would have been more beneficial in my case. Thanks for your feedback.

 

Suppliers rarely report late payments...its not worth the trouble. They only report defaults, and then only larger ones. No point throwing good money (labour cost yo report) after bad.

 

A blank credit report means a clean credit history. Think of any credit inquiry at all as a dirt stain.

 

It's different in the states.

Here in AUS a blank credit history is quite common. However, if it's blank and new, that's not ideal. Hopefully the file age is from before you left.

You can check that yourself or ask a mortgage broker to check for you (they should leave no print when they check).

Hope this helps?

Cheers,
Ethan

 

Thanks all for clearing it up.

Yes my experience in Hong Kong shows that having a completely blank file may impact on pricing as there's no proven credit history / reliability. Interesting to see that it's treated differently in Australia.

Cheers

 

Banks credit scoring is far more important than your credit report - that's why the banks spend so much money developing it.
CBA - Don't recall the exact figures but was something along the lines of <0.50% CAT1 Default compared to >10% CAT5
The ability to lend to those that are less likely to default is very profitable.
I'm a optimist so I looked at the 90% of the CAT5s doing the right thing at which point I was reminded that the cost of the 10% that default outweighs the profit of those doing the right thing.

 

@Brady might be able to answer this.
Does the banks credit scoring take into consideration where the credit was sought?

For example If I had to lend to 1 of 2 identical people. The only difference was on their credit reports 1 had 2 enquires for say 5k from say ANZ and Westpac. The next had an identical credit report except they sought credit from Nimble and CashConverters I would definitely lend to the first person.

In my eyes places like CashConverters and Nimble are the dirtiest type of credit. Just curious if the banks see it the same way?

 

Don't know the answer - they don't tell too many people what the actual credit scoring is, otherwise could be manipulated.
But I believe it would, I've had a few application were was refinancing a 3rd tier lender usually only used for bad credit (bluestone)
Application scored a CAT 4 (cat 5 being the highest and worst) - couldnt see too much else that would have scored the application bad.

If we as customers perceive it to be dirty credit, I would only think the banks would see it the same way or worse

If I remember next development day I'll ask some of the big wigs.