Credit score, credit file, credit history - what's the difference?

Understanding credit and all of its terms can be confusing, especially when they all sound so similar. Terms like credit score, credit file and credit history are all as equally important to understand as the next. 

Something to note is that these terms can be referred to as different things, double confusing. Credit history can be called ‘credit report’, and credit rating can also be your ‘credit score’, both of these things are filed under your credit file.

Basically, if you've had anything to do with applying or using credit in your life, then you are likely to have a credit report and a credit score. It’s a way for banks to determine how creditworthy you are and how you’ll handle repaying a loan.

Now that you know this, we can break things down further. So take a deep breath, we’re here to clear things up and help you get your head around it all.

A credit score is a point system which summarises your credit file and shows banks and lenders how reliable you are to lend to. It’s a single number that acts as a snapshot of your financial behaviour. There are many different factors that make up your overall credit rating which means two people could have the same credit score, but the information that leads to that score could be completely different. Here are some of the key facts to know:

• Your credit score is determined by a calculation of all your financial and personal information on your credit report.
• It will be displayed as a number from 0-1200. This number falls somewhere on a five-point scale (excellent, very good, good, average and below average). For example, a good credit score falls between 622-725. Keep in mind that different credit agencies could calculate your credit score differently, so you could wind up with two different numbers.
• It’s used to compare your credit behaviour with other credit-active Aussies and influences the amount that a lender will allow you to borrow. An excellent credit score means you’re a responsible borrower and will likely be approved for a higher loan or higher credit limit.

Whether you pay your bills on time, how often you pay them or if you’ve paid them at all, then your credit report will reveal all! You can’t hide from anything! Your credit history is a full record of debt, previous applications and any repaid loans within the last five years. Lenders can access your report at any time in the lead up to lending money or if you apply for a credit card.  Plus, thanks to the introduction of comprehensive credit reporting (CCR), lenders can now access more information than ever before. Previously, banks had only provided “negative” data for a borrower’s credit report, but now with CCR, they provide “positive” information as well, which shows a better overall reflection of the borrower. Things you’ll find on your credit report include:

• Dates you opened an account, how long you had them and what accounts they were.
• A display of your current account credit limit. If you're applying for a line of credit, the lender will review your report and consider your current and past credit limits- including any credit cards, mortgages or other loans.
• Any overdue payments of 60 days or more where collection activity has started.
• A list of credit providers you have applied for credit with, currently have credit with or have repaid a loan to in the last 5 years.

You may have heard the term ‘credit file’ used interchangeably with ‘credit report’, however, it’s important to note that these are different. Essentially, your credit file is a raw version of your credit report. When a credit reporting agency receives your information from a lender, this is then ‘filed’ under your name. These details are kept on your credit file forever. Information found on your credit file includes:

• Your personal details such as full name, date of birth, driver's licence, gender and residential addresses and employer information are all on file.
• Every time you make an application for finance an entry is recorded on your file, including applications for credit cards, personal loans and housing loans.
• Anytime you’ve made a debt agreement with your creditors, it will show up on your credit file.
• Loans or debts that are overdue, repaid or settled will all be available on your credit file. It will show the lender you applied to, the type of finance, the amount and the date.

If you’re looking to get your credit score up to scratch, then you’ll be happy to know there are plenty of things you can do to improve it. First things first, get a copy of your credit report and make sure you’ve fixed any errors, paid off any outstanding bills and keep on top of all your current bills. In that time, try avoiding any new credit applications so that you don’t risk having too many showing up on your report for lenders to see. As a last resort, there’s always the option to contact a credit repair company to help remove defaults from your credit report. 

Now that you’re enlightened by all the different credit terms, you can put your knowledge to the test and make a start on your credit history. If you are in the position and interested in applying for credit, head over to our credit card comparison page, or check out our personal loans page for some options.