Australians lag many of the industrialised economies in their use and understanding of credit reporting.

According to reporting agency Dun and Bradstreet, only 1.5% of Australians (242,000 inquiries annually) request a copy of their credit reports each year, although each individual is legally entitled to one and the request is made easily online. The second reporting agency in Australia, Veda Advantage, confirms the low average. In comparison, 2.9% of people in the U.K. request their credit report, and in the U.S.A., the figure is closer to 8.2%.

Dun and Bradstreet CEO, Christine Christian, reported that 86% of Australian women don’t even know what their credit report looks like. “The results are quite telling,” she said.

This is unfortunate, as knowledge of one’s credit profile is a financial advantage, allowing for greater long-term planning, particularly regarding major purchases such as a car or real estate. Black marks from skipped or late repayments of $100 or more, or outright defaults, don’t vanish by ignoring them or pretending they don’t exist. They remain on one’s record for five years, and bankruptcies for seven.

In part this lack of understanding is because of the current system of credit reporting in Australia, which only records the black marks and not the good ones. All too often, applicants for credit cards or mortgages don’t realize they have a poor credit record, until the loan is refused and they want to know why.

Too many applications for credit all at once also tend to make lenders wary, as this may hide financial straits or poor financial knowledge, leading to overspending and problems repaying.

A poor credit profile will make it difficult to obtain loans from reputable lending institutions, forcing borrowers to deal with subprime lenders and pay higher interest rates.

Other reasons to monitor one’s credit history include identity fraud and accuracy of reporting. Mistakes do happen, and sometimes two people’s credit profiles become mixed, with unfortunate results for the one with the superior repayment history. And often, one of the first symptoms of identity fraud will be applications for credit appearing on one’s credit report, under the correct name but not made by the proper person.

Source: http://www.heraldsun.com.au