In Australia, a credit report typically begins when an individual engages in their first credit-related activity. Legally, this can only occur once the person reaches 18 years of age, as this is the minimum age required to apply for financial products such as loans, credit cards, or even post-paid mobile phone contracts and utility accounts.
When A Credit Report Begins:
- Age Requirement: Credit reporting starts at 18 years old because this is the legal age to enter into financial agreements in Australia.
- First Credit Event: A credit report is created when a credit event occurs. This could include things like applying for a loan, signing up for a phone or a utility account.
- No Automatic Credit History: Australians do not automatically have a credit history upon turning 18. A credit file is only created after their first credit-related activity is reported to a credit bureau.
In Australia, if you wish to apply for a credit card, vehicle loan, or house loan, you must be at least 18 years old. To be eligible for this sort of service legally, you must be at least 18 years old. This is the age at which you are declared an adult and can apply for financial services as well as phone plans and utilities.
The Fair Credit Billing Act is a federal law that establishes the minimum standards for businesses who accept or transmit payment cards, but these regulations do not only apply to just credit cards. When you join up for a post-paid mobile phone plan, you are applying for credit. The applicant will have their credit evaluated and must be at least 18 years old. Gas and electricity are examples of the utilities that are covered by this law.
Practical Implications
A credit report does not exist until an individual begins to apply for these services, however this is why young people in Australia may discover that despite being 18 or older, they do not have a credit history because their parents are still the account holders for more accessible forms of credit, such as mobile phone plans.
Young adults who have never applied for credit may not have a credit score or history, even after turning 18. Starting small, such as taking responsibility for bills or phone plans, can help build a positive credit history over time.
As a young Australian, there are some things you can do to raise your credit score and increase your chances of being accepted for financial products.
But what is the average credit score in Australia?
By starting small, you are less likely to be approved for a credit card if you don’t have any credit history. It’s probably better to start with credit offers that have easier eligibility requirements, such as putting a cell phone plan under your own name or having your name added to a utility bill.
It’s not enough to pay your bills on time; you’ll also want to get into the habit as soon as possible. To ensure that you never miss a payment due date, add reminders to your phone or establish direct debits. Positive credit behavior like this may improve your credit score. It also helps to create good behavior and might prevent you from incurring late payment penalties or defaulting further down the road.
It’s something you don’t usually learn, is that every time you apply for a product like this, the provider will perform a hard credit check on your credit history. Credit checks allowed vendors to assess your credit behavior to see if you would be able to pay their product.
However, the hard inquiry will also show up on your report. If you make numerous credit card or loan applications in an attempt to hedge your bets, this may reduce your chances of being approved. Providers will view you as a riskier customer because you are making numerous applications.
You generally need to be accepted for a financial product in order to improve your credit score by following good financial habits, but you may not be approved if your credit history is short, resulting in a catch-22.
Consider asking someone with a good credit score to go guarantor or co-sign an application on your behalf if you have a limited credit history because of your youth. Having this extra individual join your application will improve your chances of approval by improving their credit history and personal information.
