About Credit Reports and Credit Scores

A credit score is used by financial lenders to decide whether to give you credit or lend you money. Your credit score is based on personal and financial information about you and is part of your credit report. 
Credit reports include the following:

• the amount of money you have borrowed
• credit applications you have made
• repayment history
• defaults on utility bills, credit cards and loans 
• bankruptcy and debt agreements 

An online credit score provider can provide you with your latest credit report. You can access your credit report for free. Do not use any provider that asks for payment of your credit report. 

Your credit score is calculated from your credit report. You will receive a score between 0 to 1200. The higher the score means the financial provider will consider you less risky, and the lower will affect if you can get a loan or not. 
Knowing your credit score can help you negotiate better deals on different types of loans, or understand why a lender may have rejected your application.
When you receive your credit report check that:

• Your name, date of birth and address are correct.
• All the loans and debts listed belong to you.

If anything is incorrect contact the credit reporting agency and have this fixed.
If you have a low credit score beware of credit repair companies claiming they can clean your report by having information removed. It is unlikely as the correct information, can not be removed for a period of two to five years, depending on the product. 
Here is what will stay on your report and the time implications:

• All payments you've made during the last two years on credit cards, loans or bills, no matter if you paid on time or not.
• Payments of $150 or more that are overdue by 60 days or more for five years, even after you have paid them off.
• All applications for credit cards, store cards, home loans, personal loans and business loans for five years. 

A credit provider may have misreported information, and you can have this fixed by contacting them. They may have:

• incorrectly listed that a payment of $150 or more was overdue by 60 days or more
• did not notify you about an unpaid debt
• listed an outstanding debt while you were in dispute about it
• didn't show that they had agreed to put a payment plan in place or change the contract terms
• created an account by mistake or as a result of identity theft

If your credit score is low, here are a few simple ways you can improve your score:

• lower your credit card limit
• limit how many applications you make for credit
• pay your rent or mortgage on time
• pay your utility bills on time
• pay your credit card on time each month — either pay in full or pay more than the minimum repayment

The MoneySmart website has a comprehensive guide to credit reports. To read more visit.