Aren’t credit score and credit report essentially the same thing?

Any general questions you might have in regards to loans and finance.
Kimberly M
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Joined: Wed Apr 03, 2019 5:56 pm

Aren’t credit score and credit report essentially the same thing?

Postby Kimberly M » Wed Apr 03, 2019 5:57 pm

Hi, I’m trying to understand the difference between a credit score and a credit report.
Aren’t they essentially the same thing?

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Otto Dargan
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Re: Aren’t credit score and credit report essentially the same thing?

Postby Otto Dargan » Wed Apr 03, 2019 6:43 pm

Hello Kimberly. Welcome to the forums.

Your credit report is a record of your borrowing history maintained by credit reporting agencies such as Equifax (previously Veda Advantage). It contains your personal details and a list of your past and present debts. The information can be seen by the banks and lenders and also includes:

  • Loans that you have applied for in the last five years are listed as enquiries.
  • Loans or accounts where you are more than 60 days overdue are listed as defaults.
  • Court judgements and court writs.
  • Bankruptcy history (including Part IX history).
  • Company directorships.

Your credit score is an automated assessment of how risky you are to a lender. It is a numerical figure calculated entirely by computers using information from your loan application and your credit report without any human input.

In short, a credit report is the detail of your credit history to date whereas a credit score is simply a number derived from the information on your credit report or credit file.

While all lenders view risk differently, you’ll find that our credit score calculator is an excellent guide that can help you understand why a bank may decline your loan.

Speak with one of our specialist mortgage brokers by calling us on 1300 889 743 or fill in our free assessment form to find out with which lenders you qualify for a home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Kimberly M
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Joined: Wed Apr 03, 2019 5:56 pm

Re: Aren’t credit score and credit report essentially the same thing?

Postby Kimberly M » Wed Apr 03, 2019 7:52 pm

Honestly, I had no idea that too many credit enquiries negatively affected my credit score. I have three credit cards with a total limit of $15,000 with St.George, Amex and Citi. I make regular payments towards my credit card debts. Why is too many credit enquiries an issue?

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Otto Dargan
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Location: Sydney, Australia
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Re: Aren’t credit score and credit report essentially the same thing?

Postby Otto Dargan » Wed Apr 03, 2019 8:29 pm

Hi Kimberly,

Credit enquiries are a record left on your credit file showing that you applied for credit. If you have too many enquiries on your credit file then the lenders will see you as a high-risk borrower.

They worry that you may have been declined by all of the other lenders, and they wonder what the other lenders know about you that they don’t.
As a result, your credit score is reduced.

When it comes to credit enquiries the major lenders prefer if you only have one or two enquiries in the last six months, any more than this, then it is likely the banks will decline your mortgage.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Kimberly M
Posts: 3
Joined: Wed Apr 03, 2019 5:56 pm

Re: Aren’t credit score and credit report essentially the same thing?

Postby Kimberly M » Thu Apr 04, 2019 11:27 am

Can you tell me which banks use credit score and what do their scores look like?

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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia
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Re: Aren’t credit score and credit report essentially the same thing?

Postby Otto Dargan » Thu Apr 04, 2019 12:43 pm

Hi Kimberly,

All of the major Australian banks use credit scoring to some extent. Some lenders such as ANZ and Westpac rely heavily on automated credit scoring to make the decisions on their home loan applications.

Whereas CBA, St.George and NAB tend to use a combination of scoring and manual credit assessment.

CBA, for example, assigns home loans with a score from 1 to 5. Applications given a score of 1 or 2 are fast-tracked for a quick approval, whereas applications scored as a 3 are referred for a manual decision.
A score of 4 or 5 is almost always declined.

Citibank’s score is in the format of a letter ranging from A to D. A, B and C applications are approved based on their merits, while D applications are referred to Citibank’s mortgage insurer for assessment.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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