Most people have a credit score, but few understand the specifics of how it is constructed. Your report could be the difference between getting a loan approved or rejected, and there are many myths attached to how the report is constructed. It’s common for applicants to become nervous on the back of these myths, especially when they are making an application for a life changing investment such as a home. So to help put your mind at ease we’ve sourced three of the most common myths present today.
A common perception by people is that checking your credit report can be detrimental for your overall score. This is not true. There are two types of enquiries that can be made with regards to your credit score. Checking your own credit report is known as a ‘soft’ enquiry and does not affect your score. However, giving a lender permission to check your report does affect your score as this is classed as a ‘hard’ enquiry. Therefore it’s up to the credit provider to decide which credit score they use.
Every consumer will have a number of different credit scores and generally speaking you won’t be able to gain access to each individual score because they aren’t actively sold to consumers. In Australia, there are three bureaus that conduct credit reports, each one with their own variant to calculate the score. Therefore it’s up to the credit provider to decide which credit score they use.
The role of a credit reporting body isn’t to provide judgment or recommendations based on the findings in your credit report. You will never be granted or denied credit on the back of a credit reporting body recommendation because their job is exclusively to present information on a person’s debt and present that information to lenders.