What does unable to obtain credit mean?

What role does a Credit Report play in the provision of credit? How do lenders use my Credit Report?

When you apply for credit, your Credit Report can be an important piece of information. Credit providers may use it, along with the information on your application form and their own lending criteria, to help them get a clear picture of your credit commitments and how likely you are to be able to make repayments on future credit.

Credit providers can include banks, financial institutions, phone and utility (electricity, gas and water) companies.

Your Credit Report may be considered as part of the information that can be used to determine whether you are approved for a particular credit card, loan, mortgage or service, and on what terms.

What should I do if I've been rejected for a loan?

If you have been denied credit it is best not to apply for credit again until you find out why. There are a number of factors that may result in an application for credit being refused including:

• Not having either a high enough income or sufficient savings to meet the repayments

• The number of other loans and other financial commitments you have

• How secure your employment is

• What’s on your Credit Report, in particular entries for previous bankruptcy, defaults, serious credit infringements, a high number of credit applications or a poor repayment history

If you have been declined credit and the information on your Credit Report was a factor, the lender, phone or utility company will give you details of the credit reporting body they used.

If it was Equifax, the first step in understanding why your Equifax Credit Report has contributed to you being declined credit, is to obtain a free copy of your Equifax Credit Report. If you have been declined credit you are entitled obtain a free credit report if you apply within 90 days of being declined and provide evidence that a credit provider has declined your application for credit.

By getting a copy of your Equifax Credit Report you can better understand what information may have contributed to your application refusal. It is important to check your Equifax Credit Report regularly to ensure it is accurate. You may also consider subscription plans from Equifax that provide additional features such as Credit Alerts and Credit Scores that can help you manage your credit profile.

Learn more: CreditSmart helps explain what to do when you can’t get a loan.
 

Why was I declined credit?

There are a number of reasons why a credit provider may reject an application for credit.

Each credit provider has their own lending criteria and these are the basis for their credit decisions. Your loan may have been rejected because:

• The credit provider may be concerned that you will not be able to keep up with the repayments based on your income and current debts and financial obligations
   

• The amount of money in your savings account/s is not enough to prove that you will be able to meet the loan repayments
   

• The credit provider has checked your credit report and found that you have a default or other negative information
   

• Your employment history. If you are unemployed, change jobs frequently or are working your way through a probationary period, you may not be able to demonstrate you can service your loan
   

• Residential situation. Moving house on a regular basis can be a potential reason for a credit application refusal

Make sure you obtain a free copy of your Equifax Credit Report or you may consider subscription plans that include Credit Alerts and Credit Scores that can help you manage your credit profile.

If you've been denied credit, it's important to understand why. Obtaining a copy of your credit report is one of the steps to take in understanding your credit profile. Here are some tips to consider.

1. Find out why

When you apply for credit either with a phone or utility company or a loan with a bank or finance company, they generally assess both the information on your application as well as information on your credit report against their own lending policies to make a decision on whether they will give you credit.

As part of completing your application, you will have given a lender, phone or utility company permission to view your credit report held by a credit reporting body such as Equifax, Australia’s largest consumer credit reporting agency.

There are a number of factors that may result in an application for credit being refused including:

• Level of income and other resources to meet the loan repayments
• Number of other loans and other financial commitments you have
• How secure your employment is
• Your credit history which can include information such as previous bankruptcy, defaults, serious credit infringements, high number of credit applications and poor repayment history.

If you have been declined credit and the information on your credit report was a factor, the lender, phone or utility company will give you details of the credit reporting body they used. If it was Equifax, the first step in understanding why your credit report has contributed to you being declined credit, is to obtain a copy of your credit report.

It’s important to know that Equifax does not decide who should get credit, however, the information we provide may form part of some lenders’ decision making. What Equifax can do is to help you understand the information on your credit report.

What is a credit report?

Your credit report holds information relating to your credit history. If you’ve ever applied for credit or a loan it is likely you will have credit information held by a credit reporting body like Equifax. Credit can come in many forms. Along with credit cards, personal loans and mortgages, credit also includes mobile phone, electricity and gas contracts as well as store and rental finance.

Your credit report helps lenders, phone and utility companies get a clear picture of your credit worthiness. It helps them understand your current credit commitments and how likely you are to be able to make repayments on future loans.

Your credit report includes information such as:

• Personal details such as your name, address and date of birth
• Consumer credit information
  • Credit enquiries (applications you have made for credit for personal use)
  • Credit account information – Date account opened and closed, type of credit account, credit limit
  • Repayment history information
  • Overdue debts like payment defaults (paid and unpaid)
  • Serious credit infringements
• Publicly available information such as personal insolvency information, court writs and judgements and directorship information can also be included as part of your consumer credit information on your credit report.
• When you ask for a copy of your credit report we will also provide you with any commercial credit information such as credit enquiries and overdue debts like payment defaults that we hold on you.

Getting a copy of your Equifax credit report as well as your Equifax Score (or credit rating) can help you understand where you stand when it comes to applying for credit. It is important to check your credit report regularly to ensure it is accurate and by knowing your Equifax Score you can manage your credit profile and improve it over time.

What is an Equifax Credit Score?

Your Equifax Score is a credit rating between 0-1200 that lenders can look at when deciding whether to accept your application for a loan or credit. Generally, the higher your score, the better as it indicates a lower risk.

Your Equifax Score is calculated using the information on your credit report at a certain point in time and can be used by lenders to assess your application for a loan. Your Equifax Score is dynamic and changes as information is added to or deleted from your credit report.

Your Equifax Score is also a great tool in helping you understand the information on your credit report. If you’ve ever looked at your credit report, you’ll know that it can contain lots of unfamiliar information that can be difficult to understand. When you obtain your Equifax Score as part of one of our annual subscription plans, not only do you find out your credit rating, but you’ll also learn what information on your credit report is contributing to your credit rating, good and bad. We call this information ‘contributing factors’. This is really helpful to know as there are some things you can do to improve your Equifax Score credit rating if required.

2. Get your credit report

If you have been declined credit you are entitled obtain a free credit report if you apply within 90 days of being declined and provide evidence that a credit provider has declined your application for credit. You can order your free report below. The free service provides a credit report only and does not include your Equifax Score (credit rating) or Equifax Score contributing factors which summarise the major items impacting your credit rating.
 

Get your free Equifax credit report or consider a monthly subsciption package that includes credit alerts and credit scores

You will need to have the following information handy:

1. Your full name
2. Your date of birth
3. Your driver's licence number
4. Two forms of identification including
   • a copy of your driver's licence, Medicare number, passport, birth certificate or Proof of Age card, as well as
   • a document issued by an official body which includes your name and address (i.e. rates notice, utility bill or bank statement)
5. Your current residential address
6. Your previous addresses
7. Your current employer or a previous employer
8. Name of the organisation to which you last applied for credit
9. A daytime telephone number
10. How you would like your report sent to you, via post, fax or email

Only you may request a copy of your own credit report. For security purposes, prior to receiving your credit report you will be asked to verify your identity.

3. Improve your credit report to get credit in the future

There are two things you can do to help improve your credit profile:

• Check your credit report to see if the information is accurate.
• Find out your Equifax Score (or credit rating). Your Equifax Score contributing factors can help you understand the items on your credit report that impact your score. You can obtain your Equifax Score by subscribing to one of our annual subscription plans.

Correcting your credit report

Equifax takes reasonable steps to ensure that your credit report is accurate. However, as we rely on information provided by a number of different sources, errors can occur. It’s important that you check your report and let us know if there are any administrative errors such as an incorrect date of birth, or a misspelling of your name or street address. You should also check that the credit information listed on your credit report, such as an overdue debt or enquiry is accurate. If there are inaccuracies on your credit report, it’s important that you have them corrected. You can do this for free. Visit our Corrections Portal for more information. What’s more, if you think you’ve been the victim of identity theft and your details have been used fraudulently check out our tips on what to do if you think your identity has been stolen.

Be careful of ‘credit repair’ style organisations

If you are finding it difficult to get credit, think twice before paying for the services of a company that claims they can “repair” your credit report/history. Some companies claim to be able to remove negative information from your credit report and charge you to do so. This can often cost over $1,000.

If you have inaccurate information on your credit report you can lodge a correction request with the relevant credit provider or credit reporting body and they will investigate for free and correct the information if it is inaccurate.

You should also note that Equifax will not remove information from credit reports unless that information is erroneous. The fact that information is inaccurate or wrong does not mean it must be deleted. If it can be corrected, it will be corrected rather than deleted.

If there is information on your credit report that needs correcting please visit our Corrections Portal.

Tips to help you improve your credit profile

Equifax has some simple steps to help you keep your credit report healthy and to help improve your Equifax Score:

• Pay your loans and bills on time – Consider setting up direct debits and schedule loan repayments for your pay day.
• Keep track of your credit commitments – Do your homework before applying for credit and keep track of your credit commitments. Making a number of applications within a short space of time will be recorded on your file and is not always looked upon positively by lenders, as it may be an indicator that you’re in credit stress.
• If you move house, notify lenders – advise lenders, phone and utility providers of your new address so they can re-direct bills to your new address. If you don’t pay these bills, a credit infringement or overdue debt could be listed on your credit report.
• If you are having trouble meeting repayments – talk to your credit provider who may assist.
• Keep track of your credit record – proactively manage your personal credit report by regularly checking your credit report and Equifax Score. You can even monitor changes through credit alerts.

Need more information? ASIC MoneySmart has more information about loan rejection.

What affects your ability to obtain credit?

What does it mean when you can't get a credit score?

What you should do if you are declined credit?

Does a rejected loan application affect credit score?