The Importance of Monitoring and Managing Credit Enquiries in Australia

Credit enquiries refer to the instances when a lender or credit provider assesses an individual’s credit history and requests information from credit reporting agencies. These enquiries occur when individuals apply for credit cards, personal loans, mortgages, or other forms of credit.

In today’s fast-paced world, maintaining a healthy credit file has become increasingly crucial; Especially since credit enquiries play a pivotal role in shaping an individual’s creditworthiness and overall financial well-being.

This article aims to shed light on the importance of monitoring and managing credit enquiries specifically within Australia.

Why Do You Need to Monitor Your Credit Enquiries?

Monitoring your credit enquiries is important for several reasons.

• To understand who is accessing your credit information

Monitoring your credit enquiries can help you keep track of which lenders or credit providers are accessing your credit report and requesting information about your credit history. This information is essential for understanding who has an interest in your financial profile and how it may impact your creditworthiness.

• To detect unauthorised or fraudulent enquiries

Regularly monitoring your credit enquiries also allows you to identify any unauthorised or fraudulent enquiries made on your behalf. These enquiries could be a sign of identity theft or credit fraud, where someone tries to obtain credit in your name without your consent. Being vigilant and spotting suspicious enquiries promptly enables you to take immediate action to protect your financial well-being.

• To take prompt action to address inaccuracies or errors in credit enquiries

Monitoring your credit enquiries allows you to stay informed about the accuracy of the information in your credit report. If you notice any inaccuracies or errors in the credit enquiries listed, you can take immediate action to rectify them. Addressing these issues promptly helps maintain the integrity of your credit report and ensures that lenders have access to accurate information when assessing your creditworthiness.

The Impact of Credit Enquiries on Credit Scores

Credit enquiries can affect your credit scores, but the impact depends on the number and type of enquiries. If you apply for credit, the lender will check your creditworthiness with a “hard enquiry.” Having too many hard enquiries, especially if they result in rejected credit applications, can hurt your credit scores. Lenders may also view it as a sign of financial trouble making you a higher risk borrower. 1

As previously mentioned, hard credit enquiries occur when you apply for credit, such as a loan, mortgage, or credit card. These enquiries are initiated by lenders and can slightly lower your credit score, typically by 5 to 10 points. On the other hand, soft credit enquiries, such as checking your credit report or receiving pre-qualified offers, do not affect your credit score. It’s essential to be aware of the types of enquiries on your credit report to ensure accuracy and identify any potential fraudulent activity.

To minimise the negative impact of credit enquiries on your credit scores, it’s advisable to be selective when applying for credit. Each hard inquiry can have a cumulative effect, so it’s important to avoid unnecessary or excessive credit applications. Instead, focus on applying for credit only when necessary and when you’re confident about meeting the eligibility criteria. Regularly checking your credit report can help you identify any unauthorised or incorrect enquiries and take appropriate action to have them removed.

To manage credit enquiries and maintain a good credit score, consider the following strategies:

• Be cautious about applying for new credit unless necessary.
• Prioritise quality over quantity when it comes to credit applications.
• Regularly monitor your credit report to ensure accuracy and address any discrepancies promptly.
• Understand the difference between hard and soft credit enquiries and their impact on your credit score.
• Seek pre-qualification offers that use soft enquiries to gauge your eligibility for credit.

Protecting Your Creditworthiness

To protect your creditworthiness and maintain a good credit score, it is important to be selective with credit applications and be mindful of the timing and spacing of those applications. Here are some tips to help you protect your creditworthiness:

• Be selective with credit applications

  • Limit unnecessary enquiries: Each credit application you make is recorded on your credit report and can lower your credit score. Avoid applying for credit unless you genuinely need it.
  • Research and compare: Before applying for credit, research and compare different lenders and credit products. Choose the ones that align with your needs and have a higher chance of approval. This reduces the need for multiple applications.

• Be mindful of the timing and spacing of credit applications

  • Spacing out applications: Submitting multiple credit applications within a short period can raise concerns about your financial stability. Spacing out your applications over time can help maintain a positive credit file.
  • Understand credit scoring models: Familiarise yourself with credit scoring models used by lenders. Different scoring models may treat enquiries differently, so it’s important to understand their impact on your credit score.

It’s essential to stay informed about your creditworthiness and credit report. Here’s how you can access your credit report:

• Credit reporting agencies: In Australia, you can request a free credit report every 12 months or within 90 days of a credit rejection from credit reporting agencies such as Illion, Equifax, and Experian.
• Regularly review your credit report: In Australia, there are a lot of free credit checking and monitoring applications you can use; These apps will allow you to check your credit score even on a daily basis.

Did You Know? 💡Tippla is a free tool you can use to monitor your credit score. We have partnered with two of Australia’s biggest credit reporting agencies so that we can provide accurate data to our customers. Sign up with us today to see your credit score and learn more about ways to improve your credit profile through Tippla’s credit school!

Tools and Resources for Monitoring Credit Enquiries

To effectively monitor credit enquiries and maintain control over your creditworthiness, there are several tools and resources available. Here are some options you can consider:

• Utilising credit monitoring services and alerts: Credit monitoring services can help you stay informed about changes in your credit report, allowing you to detect any unauthorised enquiries or suspicious activities. One such service is Tippla, which provides credit monitoring tools and alerts to help you manage your credit reputation.

These services often provide regular updates on your credit score, changes in your credit report, and notifications of any new credit applications or enquiries.

• Checking credit reports from credit reporting agencies: Regularly checking your credit report is crucial for identifying any inaccuracies or discrepancies that may negatively impact your creditworthiness. In Australia, the top credit bureaus are:
  • Equifax: You can request a free credit report from Equifax by contacting them at 138 332.
  • Experian: Experian also provides free access to your credit report, and you can request a copy by calling 1300 783 684.
  • Illion: Formerly known as Dun & Bradstreet, Illion offers credit alerts and provides access to your credit report. You can contact them at 1300 734 806.

It’s important to note that each credit reporting body may hold different information, so it’s advisable to request a copy of your credit report from each agency to ensure comprehensive credit reporting.

• Understanding credit report codes and information: Credit reports contain codes and information that provide insights into your credit history and financial behaviour. Familiarise yourself with these codes and the details they represent. Resources such as the websites of credit reporting agencies and financial education platforms like ASIC’s Moneysmart can provide guidance on understanding credit report codes and the information included in your credit report.

• Seeking professional advice or credit counselling: If you encounter difficulties in managing your credit or need guidance on improving your creditworthiness, consider seeking financial advice from financial counsellors or credit counselling services. These services can provide personalised assistance based on your specific financial situation and goals.

Best Practices for Managing Credit Enquiries

Managing credit enquiries effectively is crucial for maintaining good creditworthiness. Here are some best practices to consider:

• Be proactive in managing and monitoring credit enquiries

Stay informed about the credit enquiries made on your credit report. Regularly check your credit report and credit scores to ensure accuracy and identify any unauthorised or suspicious activities. Being proactive allows you to address any issues promptly and minimise potential risks.

• Keep track of credit applications and approvals

Maintain a record of your credit applications and approvals, including personal details such as the type of credit applied for, the lender, the amount, and the date. This helps you stay organised and aware of your credit activities. It’s important to note that each application for credit, regardless of approval, will be recorded as a credit inquiry on your credit report.

• Maintain good communication with lenders and credit reporting agencies

Establish open lines of communication with your lenders and credit reporting agencies. If you have any concerns or questions regarding your credit enquiries, reach out to them for clarification or assistance. Timely communication can help resolve any discrepancies or address any issues related to your credit enquiries.

• Take steps to improve creditworthiness and minimise risks associated with credit enquiries

Focus on improving your creditworthiness by practising responsible credit behaviour. This includes making payments on time, reducing debt, and managing your credit utilisation ratio effectively. By maintaining a positive credit history, you can minimise the potential negative impact of credit enquiries on your creditworthiness.

Conclusion

Monitoring your credit enquiries is an essential practice for safeguarding the accuracy of your credit report, safeguarding against fraudulent activity, and effectively managing your credit health. By regularly reviewing your credit enquiries, you can verify the legitimacy and authorisation of all listed enquiries, swiftly identifying any inaccuracies or unauthorised entries that may signal potential identity theft or fraud.

The act of monitoring enquiries also provides valuable insights into the overall health of your credit. By keeping track of the number and frequency of credit applications, you can make informed decisions and take proactive steps to responsibly manage your credit. Furthermore, staying vigilant about your credit enquiries allows you to promptly detect and address any errors, ensuring that your credit report accurately reflects your true credit history.

Additionally, monitoring enquiries plays a vital role in managing your credit score. By avoiding excessive credit applications that can temporarily lower your score, you can protect your creditworthiness and maintain future credit opportunities. By actively monitoring your credit enquiries, you demonstrate a commitment to maintaining the accuracy of your credit report, fortifying your defences against fraud and making informed decisions to uphold a healthy credit profile.