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Credit – frequently asked questions

How do I find out my credit rating?
Can I help a family member by signing as a co-borrower or guarantor on their credit application?
What can I do if I think my credit contract is unfair?
How do I choose a loan?

How do I find out my credit rating?

Credit ratings do not exist for consumers, but if you have ever applied for credit, or even a phone connection, you probably have a credit history.

Credit history reports contain information about:

  • applications for credit, including the amount asked for
  • any failures in making payments
  • court judgments if you have been sued for a debt
  • whether you have gone bankrupt
  • serious credit infringements, for example, if you have deliberately avoided paying the debt.

Bankruptcy and serious credit infringement listings stay on your credit report for seven years. Other listings stay for five years.

When you apply for credit, a lender will usually check your credit history.

Credit history reports are kept by credit reporting agencies such as Veda Advantage.

You can get a copy of your credit report from Veda Advantage's My Credit File website. You can pay to have access to your credit file online, or request that a copy be sent to you for free (this takes about 10 working days).

Related websites

Veda Advantage

Can I help a family member by signing as a co-borrower or guarantor on their credit application?

People often sign contracts to help family members or partners get credit without realising that this makes them responsible for paying the contract.

Responsibility to repay the debt is different for co-borrowers and guarantors, but you could end up paying the entire debt whichever you are.

It is a common belief that if you are a co-borrower with someone else, you are only legally responsible for paying half the debt. This is not correct.

Co-borrowers have what is known as 'joint and several liability' to pay the debt. This means that each borrower is responsible for the entire debt. If one borrower can’t be pursued for payment, for example, because they go bankrupt, the lender can pursue the other borrower/s for the entire debt.

For a lender, a guarantee secures the loan. If the borrower cannot pay, the guarantor may lose their home or possessions to pay the debt.

The borrower has primary responsibility to pay the debt. A guarantor has secondary responsibility to pay the debt. This means that the guarantor can’t be pursued by the lender for the debt, unless the lender has first tried to get payment from the borrower/s.

What can I do if I think my credit contract is unfair?

For most consumer loans the law requires the lender to make clear what the total cost will be. This includes the interest rate, fees and charges for the loan, and how much this will cost over the length of the loan.

Lenders must provide comparison information for all consumer loan products to enable you to find out the true cost of the loan, taking into account fees and charges. Read this information carefully, as it can sometimes be misleading.

If information is not properly shown on the loan documents, or if the advertisement says one thing but the contract says another, get legal advice.

You may be able to get compensation. If you think something has gone wrong, keep all the paperwork and the advertisement and get advice early.

If you think your credit contract is unfair, you may be able to apply to the Credit List at the Victorian Civil and Administrative Tribunal (VCAT) to have it changed. You should get legal advice about this.

Related websites

Consumer Action Law Centre

VCAT Credit List

How do I choose a loan?

It’s worth shopping around for a loan – different lenders offer different kinds of products.

Always:

  • check the fees and charges that apply in each case
  • ask if the interest rate is fixed (this means it stays the same for the length of the loan) or variable (this means that the interest rate may go up or down during the length of the loan)
  • look for the lowest interest rate possible.

Lenders must provide comparison rates for all consumer loan products. This is so you can work out the true cost of the loan, taking into account fees and charges. Read this information carefully, as it can sometimes be misleading.

Also make sure you understand what can happen if you stop paying.