How to Prevent Mistakes on Your Credit Report

Whilst mistakes on your credit report can be common, there are certain things you can do to minimise the risks and even prevent mistakes on your credit report. We’ve outlined how you can do this below.

Why are there mistakes on your credit report?

There are numerous reasons as to why there could be mistakes on your credit report. Whilst some reasons might depend on your particular circumstances, there are two main reasons why there are mistakes on your credit report – consumer error and creditor error. For a more in-depth overview, take a look at our recent article which covers why there are mistakes on your credit report.

Common mistakes on your credit report

Chinelle Wardle, the Director of Wardle Consultancy Services Pty Ltd, outlined the most common mistakes she has seen on credit reports as follows:

• Personal information – incorrect name, outdated address, previous employer, incorrect driver’s licence number;
• Credit enquiries – the incorrect amount that was applied for listed;
• Repayment history – not included at all.

Why do mistakes on your credit report matter?

We recently covered this in our article on how to fix mistakes on your credit report. To put it simply, mistakes matter on your credit report, because they can significantly lower your credit score. Why does that matter? Check out our video below.

Your credit score can be the difference between you being accepted or rejected for credit, it can also affect your interest rate and borrowing capacity. Therefore, the higher your credit score, the better.

How to prevent mistakes on your credit report

How can you prevent mistakes on your credit report? We recruited Wardle’s help to answer this question. To make it easier, we have broken this up into four sections – applying for credit, late repayments, updating your information, and what to do in hardship.

Applying for credit

One of the most common places where mistakes are born is during the application process. Mistakes can be made here by both the consumer filling in their details incorrectly, or the creditor making a mistake when inputting customer details.

That’s why it’s important to clarify the information on your application before it is submitted. Wardle specifically advises customers to call up the lender they have applied with to ensure they have input your information correctly. 

Late repayments

On your credit report credit providers can list both missed payments, and defaults. The difference between the two is that a missed payment is a payment you make more than 14 days after the due date. Credit providers aren’t required to send you a written notice before listing a missed payment on your credit report.

Defaults are more serious, and according to the Office of the Australian Information Commissioner (OAIC), credit provider’s can only list a default on your credit report if:

• The payment has been overdue for at least 60 days;
• The overdue amount is equal to or more than $150;
• A notice has been sent to your last known address to let you know about the overdue payment and requesting payment;
• A second notice was sent at least 30 days later to let you know that if you don’t make a payment the credit provider intends to disclose the information to a credit reporting body;
• the credit provider must wait at least 14 days after issuing the second notice before listing the default.

Whilst defaults on your credit report are serious, late (or missed) payments can also harm your credit score. According to Wardle, it is quite common for missed payments to be incorrectly listed on your credit report.

Watch out for: changing the repayment date

Specifically, she highlights that one of the most common reasons that late repayments are incorrectly listed on your credit report is when consumers try to change their repayment date. Although the new repayment date is agreed to by the provider, they can fail to record the variation on their internal system correctly.

In order to combat this, Wardle advises Australians to do the following, “If you receive any notice for payment and can’t pay by the due date, the first thing you need to do is call the credit provider to organise a new payment date. Ensure that you obtain the reference number of the call. Once you have completed the call, send a confirmation email to your credit provider citing the reference number of the call to confirm the new agreed payment date.”

This, Wardle outlines should prevent incorrect repayment details and defaults from being added to your credit report. It should also prevent debt collection activities from being placed on your account.

Be proactive

Having outdated information can lead to multiple credit reports created in your name. One way you can combat this is by proactively updating your personal information with creditors.

This is especially important for your contact information – your address, phone number and email address.

Being proactive can prevent outdated information from appearing on your credit report, and reduce the risk of multiple credit reports being generated in your name, which can harm your credit score.

What to do if you are in hardship

If you miss a repayment and can’t afford to pay it back, then it can end up as a default on your credit report. If you find yourself in a difficult financial situation, according to Wardle, it is important that you are honest with your creditors immediately.

Specifically, Wardle recommends that you contact your creditor as soon as you find yourself in financial hardship and ask to be referred to the hardship team to discuss any payments. This way, you are taken out of the collections team and it can stop your report from being negatively impacted. Wardle also suggests that you request a thorough assessment of your loan account and a confirmation email from the credit provider that your report will not be impacted as the hardship claim is being assessed.