If the Optus and Medibank hacks have you worried about the safety of your information, it’s good to know there are actually a few ways to protect yourself and the family. As it turns out, one of the best ways to fight back against the hackers is actually the easiest. It’s all about checking your credit score – and yes, we’ll explain exactly what that is and how to do it.
What is a credit score?
A credit score is a number that reflects your “creditworthiness“. What does this mean? Well, the number is supposed to correspond to your ability to pay back a loan. The higher the score, the more likely you are to reliably pay off a mortgage, credit card or personal loan. Banks, lenders and other institutions can check your credit score before deciding whether or not to approve you for a loan or credit card. Which is why you’ll want to have a good score!
Credit scores are issued by credit reporting bureaus – the bigger ones being Exeperian, Equifax and illion. These companies calculate and give you a score based on your previous “credit habits”. If you’ve had a credit card for a few years and consistently pay it off – and on time – it’s likely that your credit score could be pretty high. But if you miss credit card or mortgage payments, or even if you’ve missed your phone or electricity bill a few too many times, this could cause your score to go down.
It’s worth noting that each bureau has its own grading for credit scores (either 0-1000 or 0-1200), so you may have multiple credit scores based on the grading and assessment of these three bureaus.
How do you find your credit history and credit scores?
The easiest way is through either an app like RateCity’s Credit Score app – which lists both your Experian and Equifax scores. Or you could alternatively contact Experian and Equifax individually.
The credit reporting bureaus legally must provide you with a free copy of your credit report once every three months, if requested. Every quarter, it may be worth requesting copies of your credit reports and going through with a fine-tooth comb.
Why does checking your credit score help protect you from data hacks and fraud?
The biggest concern for most of us whenever we see another company being hacked, and our data being stolen, is identity theft. What if someone uses your driver’s license and email address to open a credit card or a loan in your name and you have no idea?
Well, your credit score isn’t just a number. It also comes complete with a whole file and record of all your open credit. So, when you check your score through RateCity’s credit score app for example, you’ll see a list of any credit cards or loans open in your name. If someone were to fraudulently open a credit card with your details, checking your credit score could allow you to spot this suspicious activity and have it cancelled immediately.
Think of it like this. Your credit score is, in a way, the canary in the coal mine to indicate if suspect activity has occurred by way of your financial information.
But how exactly could someone open a loan or card in my name?
When your data has been compromised, whether through a data breach or other form of scam, the criminals could use this information to drain your available credit (such as maxing-out your credit cards) or apply for further lines of credit.
To apply for credit, you typically need to provide income verification documentation, as well as personal identification documentation, such as your driver’s license, passport, recent PAYG slip, recent bank statements, and more. The exact pieces of info that are often stolen in data hacks. This info is then used as part of the assessment criteria to decide if you are approved or rejected for the credit product.
Unfortunately, even the most tech-savvy Australians can be manipulated by sophisticated scams. This can be catastrophic for your credit history and financial health. As your credit score keeps track of your financial health, it is really important that you check your score regularly to check for anything nefarious.
The reporting bodies that oversee consumer credit scores are credit reporting bureaus, with the major Australian players being Experian, Equifax and illion.
What to do if you see something suspicious?
Look for instances of behaviour or products that you do not recognise, such as a new credit card being opened, or a rejection for a personal loan you did not apply for. If anything looks out of the ordinary, or if errors are recorded (mistakes can happen), immediately flag them with the reporting bureau, and the bank or credit provider listed.
Keep in mind: If you are a younger Australian or new visa holder or resident, you may not have a credit history yet. This is normal, and it can take a little time to grow your credit history. Start by considering opening a phone plan under your name (outside of your parents’ plan), as this is a less-risky type of credit to repay.
Checking your credit scores
While checking your credit file can take several business days, and may only be accessed each quarter, you can check your credit score at any time, for free, using the RateCity App.
Simply provide the same details you would to access your credit history, and the app will show you not one but two credit scores from major bureaus, Experian and Equifax. This process will also not impact your credit history or score at all, as only a soft credit check is performed.
Once you have instant access to your credit scores, you can keep track of any sudden changes that may indicate that scammers have accessed your financial information. You can also use it before applying for credit products, like a car loan or a credit card to ensure your credit score is in the healthiest range to boost your chance of approval