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images (7)Are you confused about what your credit file is, compared to your credit score? We can clear up the confusion for you.

What is a Credit File?

There are three credit reporting agencies that hold a copy of your credit file. These are Veda Advantage, Dun & Bradstreet and Experian. When the credit reporting agency receives your information from the lender/service provider, this is then “filed” under your individual name. This is then referred to as your credit file.

Your credit file is updated with details such as:

  • Your personal details
  • Details of any joint applications you have made with someone else
  • Credit applications (credit cards, personal loans, housing loans etc.) This includes any loans you’ve agreed to be a guarantor for.
  • Arrears (loans or debts that you are overdue in paying or those you have now repaid or settled).
  • Defaults
  • Debt agreements
  • Commercial and business loan applications you’ve applied for
  • Court Judgments
  • Writs

Your personal details are kept on your credit file forever.

All other details have specific expiry dates ranging from 2 years up to 7 years.

Each credit reporting agency maintains their own files of consumer credit information so it’s possible you could have a credit file with all, some or one of the agencies.

Be aware that your credit file may not be exactly the same if you compare them from different agencies because a lender/service provider may not send your information to every agency.

What is a Credit Score?

Your credit score is a number that is calculated using the information contained in your credit file.

In Australia, your credit score will fall in a range. For example, with Veda Advantage the range is between 0 – 1200.

The higher your credit score, the better your chances are of getting a loan or service.

Because your credit file is always changing, for example you may take out a new loan or had something expire that was listed, your credit score is also regularly updated.

You also can have more than one credit score, because each credit reporting agency calculates their own credit score, based on the information they hold on you.

So how important is a credit file compared to a credit score?

Your credit file is the most important of the two. This is the credit file that the bank sees to work out whether you should be approved for finance. The reason banks and other credit providers look at a credit file is because it contains all the information they need to see to make a decision. It will tell you whether you have overdue accounts and judgments that will ensure you won’t get a low interest loan. It will tell you how many credit applications you have made which will impact whether you can be approved for finance. Finally, it will also tell you about all your commercial credit enquiries, contracts, and overdue accounts and judgments.

On the other hand, a credit score is a numerical indicator of the status of your credit file. It is not useful to help you when you are trying to understand the reasons why you are being knocked back for finance. This is because a credit score doesn’t give you any in-depth information. In order to understand what is really going on you need to obtain your comprehensive credit file, and then seek a specialist assessment of it, to improve your chances of being approved for finance.