Credit Check - What Is Shown?

[NoName]

Hi,
Looking for some information about what exactly shows up in a person’s credit history – ie when someone does a credit check, what is actually seen.

Situation:

Had two cards. Never make late payments.
Applied to increase the limit on card 1 so as to transfer the balance of card 2 to a lower rate of interest.
Reduced the limit of card 2 accordingly.

What will be seen on my credit history?
Both credit increase and balance transfer?
Credit increase only?
Balance transfer only?
Neither?


Additionally, does a credit check/history show number or cards and/or total available credit? Does it show when a card is cancelled or has its limit reduced?


Thanks for your help.
Cheers

 

[greenfrog86]

Hi,
Looking for some information about what exactly shows up in a person’s credit history – ie when someone does a credit check, what is actually seen.

Situation:

Had two cards. Never make late payments.
Applied to increase the limit on card 1 so as to transfer the balance of card 2 to a lower rate of interest.
Reduced the limit of card 2 accordingly.

What will be seen on my credit history?
Both credit increase and balance transfer?
Credit increase only?
Balance transfer only?
Neither?


Additionally, does a credit check/history show number or cards and/or total available credit? Does it show when a card is cancelled or has its limit reduced?


Thanks for your help.
Cheers

At the moment, credit files in Australia don't show much at all... They usually just show 'queries' which is listed when a credit company chooses to check your file. This could be when you apply for a new product, or it could be when you request a limit increase.

Balance transfers are never shown as they are not a 'credit' event. Also, most banks etc won't show an increase or a decrease specifically... If your current credit products are show, they usually show something like 'a revolving credit account' or similar vague description.

All of this is because Australia works on a 'negative' credit bureau system where the only things shown other than 'enquiries' are negative events such as defaults. A default is a serious event and is only triggered after a period of time (eg 90 days past due). Therefore if you are five days late with your payments it is very very unlikely that this will be listed.

This system is changing however and we will soon have a more comprehensive approach, but nothing quite like the well known US system.

In summary

• Balance transfers are never listed
• limit increases may or may not be shown as an enquiry
• number of cards is not shown, however some providers choose to list that you have an account with them
• Total limits are not listed

Is there a reason for your question?

 

[mitwg]

I actually requested for a Veda file very recently and received one today. I requested this a few weeks ago (so much for their 10 working days guarantee) pretty much as a curiosity and once I received it, as greenfrog86 noted above, found it to be very bare.

It listed a separate page with all my credit requests (new accounts) and then another page of regular monthly enquiries (the monthly check that AMEX and the other banks I have CCs with perform). Was pretty disappointed actually regards to the lack of information as I was expecting more like a FICO score type report.

 

[The Rok]

I actually requested for a Veda file very recently and received one today. I requested this a few weeks ago (so much for their 10 working days guarantee) pretty much as a curiosity and once I received it, as greenfrog86 noted above, found it to be very bare.

It listed a separate page with all my credit requests (new accounts) and then another page of regular monthly enquiries (the monthly check that AMEX and the other banks I have CCs with perform). Was pretty disappointed actually regards to the lack of information as I was expecting more like a FICO score type report.

The only way you will get the credit score is if you are a registered finance broker/agent doing an agency report. It will give the score in a bar graph. 0-1200. Anything less than 600 is a poor credit file and will result in auto decline usually. 600 - 800 is normal range, 800+ is good. For reference, every enquiry is 25 points from memory.

 

[greenfrog86]

The only way you will get the credit score is if you are a registered finance broker/agent doing an agency report. It will give the score in a bar graph. 0-1200. Anything less than 600 is a poor credit file and will result in auto decline usually. 600 - 800 is normal range, 800+ is good. For reference, every enquiry is 25 points from memory.

Individual organisations in Australia put a fair amount of emphasis on their own credit scoring too... The has can do this as many people have more than one product with them.

As far as I'm aware the 'number score' system is much more American and not a big feature of credit reports in Australia. Consumers here certainly won't know a numerical score that reflects their credit history as many people in the US will...

 

[The Rok]

Individual organisations in Australia put a fair amount of emphasis on their own credit scoring too... The has can do this as many people have more than one product with them.

As far as I'm aware the 'number score' system is much more American and not a big feature of credit reports in Australia. Consumers here certainly won't know a numerical score that reflects their credit history as many people in the US will...

Every lender will have its own credit scoring formula, but they will not differ too much from the one Veda & D&B use. Its just a guide. But @ 25points per application it should emphasise to people the risk of applying for too many credit cards. While Amex might not use a 0-1200 scoring system, or 25 points per application, their credit scoring system is going to operate on a similar formula with similar consequences.

 

[NoName]

Thanks for the reply guys.

Speifically I guess would an ongoing Commbank credit card show up in a credit file?

 

[Aussie_flyer]

Thanks for the reply guys.

Speifically I guess would an ongoing Commbank credit card show up in a credit file?

If you want to know what is on your credit file why don't you just obtain a copy.

 

[The Rok]

Thanks for the reply guys.

Speifically I guess would an ongoing Commbank credit card show up in a credit file?

No, probably not. But CBA would do either monthly or quarterly credit file checks on you which will show. They are not recorded as enquires and no points are deducted for them, but it would tell another lender that you hold a line of credit with CBA of some sort and if you have not declared it then they may get suspicious.

 

[mitwg]

Thanks for the reply guys.

Speifically I guess would an ongoing Commbank credit card show up in a credit file?

My recent report showed that 2 of my 3 current CC providers (Amex and HSBC) performed these monthly checks like clockwork. Not a single month missed as far as I can see on the report.

 

[smit0847]

I know it's very subjective but what is your opinion on what makes a 'good' Australian credit report? I am of the strong belief it is just as important to show the sensible servicing of a debt as having no debt at all. How many applications for credit do you think is too many? Is more than 1 per year excessive?

 

[The Rok]

I know it's very subjective but what is your opinion on what makes a 'good' Australian credit report? I am of the strong belief it is just as important to show the sensible servicing of a debt as having no debt at all. How many applications for credit do you think is too many? Is more than 1 per year excessive?

Any more than 6 per year is not good. That is for a mortgage though, for unsecured credit then probably 2 enquires per year is ideal. Depending on your circumstances then some credit providers may provide credit with 8 enquires per year. The hole system is a shambles.

The problem with the current system is that it doesn't show debt servicing, it just shows negatives which is stupid really.

 

[coles525]

Lets hope that the new credit reporting will make it easier for the user (us) to read and understand.

Also that the providers can explain it better (yes or no = reason?)

 

[wafliron]

The only way you will get the credit score is if you are a registered finance broker/agent doing an agency report.

Do lenders (as opposed to brokers / agents) not get shown the credit score too? Seems strange if they don't.

It will give the score in a bar graph. 0-1200. Anything less than 600 is a poor credit file and will result in auto decline usually. 600 - 800 is normal range, 800+ is good. For reference, every enquiry is 25 points from memory.

For the benefit of others, it's probably worth noting that the credit scoring system Veda operate in Australia is very different to the USA's FICO system. The latter is a fairly "open" system, with score impacts for certain events being public knowledge. The former is very much a "closed" system proprietary to Veda - for the most part no one other than Veda really knows how the score is determined. (and on that note, how did you find out that one enquiry = -25 points, TheRok? I haven't heard that before).

I'll also add that personally I don't place much stock in Veda's scoring system at present. I've had the chance to examine several colleague's credit files (including credit scores) and discuss what the scores suggested vs the reality with them, and in all cases the reality differed greatly from what the scores suggested.

I'll use my own as an example: last time I checked it, my score was around the 650-mark - only barely into the "normal" range. This was for a file:
- with a 10+ year history,
- showing no negative events (at all, ever) on it,
- showing very stable employment and residence history (both being commonly used credit scoring factors),
- with an enquiry in relation to a mortgage on it several years back, which indicate to Veda that I own property (a positive credit factor),
- showing regular, but not too frequent, enquiries (never more than two in a twelve month period IIRC, and normally less) - this, in combination with lack of negative credit events, should be a positive, as it shows regular but responsible use of credit.

Even "worse", one of the other metrics shown ("Relative Risk Index") indicated that Veda thought my chance of defaulting on some type of debt over the next months was > 40%, which is utterly laughable - both against the reality I know, and also when just looking at just the data on the credit file (i.e. it showed nothing which would indicate a likelihood of this).

Just my personal thoughts of course... credit providers may have a different opinion

The whole system is a shambles.

The problem with the current system is that it doesn't show debt servicing, it just shows negatives which is stupid really.

+1000. Bring on positive credit reporting. An open credit scoring system would be good, too.

 

[The Rok]

Do lenders (as opposed to brokers / agents) not get shown the credit score too? Seems strange if they don't.



For the benefit of others, it's probably worth noting that the credit scoring system Veda operate in Australia is very different to the USA's FICO system. The latter is a fairly "open" system, with score impacts for certain events being public knowledge. The former is very much a "closed" system proprietary to Veda - for the most part no one other than Veda really knows how the score is determined. (and on that note, how did you find out that one enquiry = -25 points, TheRok? I haven't heard that before).

I'll also add that personally I don't place much stock in Veda's scoring system at present. I've had the chance to examine several colleague's credit files (including credit scores) and discuss what the scores suggested vs the reality with them, and in all cases the reality differed greatly from what the scores suggested.

I'll use my own as an example: last time I checked it, my score was around the 650-mark - only barely into the "normal" range. This was for a file:
- with a 10+ year history,
- showing no negative events (at all, ever) on it,
- showing very stable employment and residence history (both being commonly used credit scoring factors),
- with an enquiry in relation to a mortgage on it several years back, which indicate to Veda that I own property (a positive credit factor),
- showing regular, but not too frequent, enquiries (never more than two in a twelve month period IIRC, and normally less) - this, in combination with lack of negative credit events, should be a positive, as it shows regular but responsible use of credit.

Even "worse", one of the other metrics shown ("Relative Risk Index") indicated that Veda thought my chance of defaulting on some type of debt over the next months was > 40%, which is utterly laughable - both against the reality I know, and also when just looking at just the data on the credit file (i.e. it showed nothing which would indicate a likelihood of this).

Just my personal thoughts of course... credit providers may have a different opinion



+1000. Bring on positive credit reporting. An open credit scoring system would be good, too.

Lenders will use their own credit scoring system and therefore have no real use for the Veda scoring system. I have never seen the report a bank gets, I am assuming it doesn't have the score, just the key information in data format for the banks own credit scoring system.

The 25 points came as a result of analysing a few credit reports done through a broker before and after credit enquires were made. Thats where the 25 points came from.

The whole credit file & scoring system here is too closed book and too difficult for the average now bloggs to understand and needs to be changed, but as I understand it the new open system is at least 12 months away.

 

[Jack_OC]

I'm confused, if it's the higher the score the better, and you get 25 points per enquiry, does that not mean that the more you apply for, the better your score?

Im sure that''s not the case, but that's the way the summary above reads to me.

 

[The Rok]

I'm confused, if it's the higher the score the better, and you get 25 points per enquiry, does that not mean that the more you apply for, the better your score?

Im sure that''s not the case, but that's the way the summary above reads to me.

A deduction of 25 points per enquiry.

 

[Jack_OC]

A deduction of 25 points per enquiry.

I see – so does everyone start on 1200? And is the number of enquires the only factor that changes your score? This would give some very anomolous results - e.g. 18 year olds who have never applied for anything would have a perfect score.

One other question - is the score only based on enquiries in the last x number of years?

 

[The Rok]

I see – so does everyone start on 1200? And is the number of enquires the only factor that changes your score? This would give some very anomolous results - e.g. 18 year olds who have never applied for anything would have a perfect score.

One other question - is the score only based on enquiries in the last x number of years?

I have never actually seen an "Opening Credit File" score as such so I do not know, however I would think its highly unlikely everybody would start on 1200.

Also, don't forget that the matrix applied to obtain the credit score will be different for different financial products. For example a mortgage might only look at enquires for the past 12 months, but an unsecured loan or credit card might look at enquires over the last 5 years, or the other way round. There are no hard and fast rules that are known to the public. The banks keep these things under lock & key for a very good reason.

The key thing to remember is that too many credit enquiries will lead to being rejected for credit, regardless of other factors. For mortgages its a maximum of 6 per year, but that includes things like phone contracts and the likes. If you are making 6 credit card applications a year you may be in for a nasty shock…..

 

[equus]

The Rok has stated it correctly before - at this time in Australia there is no such thing as a generic "credit score". Every lending institution has its own credit approval system. In many cases this involves using data sourced from multiple sources which include a credit report from a bureau (they will also use any internal information if you are already a customer, and information from your application).

If their approach involves calculating a "score" (and many do), then the eventual result, despite being a number, tends to end up as a range of outcomes ranging from auto-approve (no human intervention), through a range of conditional suggestions for approve or decline ( with varying levels of authority and procedures to confirm or reverse the decision) through to "computer says no".

The variables used, and the weighting a applied are both complicated an highly confidential. Models obviously vary between secured and unsecured, commercial and consumer, revolving or reducing etc. It is not just the "cut off" score for approval which may change, but the entire way any such score is calculated, and the variables involved.

All a credit report tells you is some of the data that a lender may or may not take into account.