Has your credit score changed overnight?

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At some point in the middle of the night, I went from being a good credit risk, to an average one.

And it’s likely that many thousands of others are in the same boat following the introduction of a new credit reporting model by Veda, the organisation that maintains credit reports for millions of Australians.

As a Veda subscriber (I pay $90 a year for the privilege of keeping an eye on my credit score and any credit file enquiries), I was informed about the changes in the reporting model at the back end of last year.

But my dramatic drop in credit rating – by a whopping 141 points – happened for no apparent reason.

On January 10, Veda issued a score – which I considered a fair one. On February 10, they issued another one – 141 points lower than the January score.

At no point during that month did anything adversely impact my credit file. No credit applications, no missed payments, no increase in limits.

In fact if anything, by credit liability was reduced – another payment off the home loan, and I also reduced the credit limit on a credit card that I hold.

Which poses the question – why the drop?

As somebody looking to sell my current home and buy another one this year, it’s a serious concern – and who knows how many people are in the same boat.

Despite my $90 a year membership, Veda can’t provide an answer. ┬áThe ‘My Credit’ section, which supposedly lists payments received and missed for the past two years, is blank. ‘Credit insights’? Blank. ‘Your combined credit limit’? Blank.

This week, Fairfax Media reported a similar story about IT worker David, who owns his house outright, has $100,000 in cash savings, $200,000 in superannuation and no outstanding debts.

His credit score – which should be very high given his circumstances – dropped below the national average. He went from 800+ points out of 1200 to 737.

“I was very disappointed because I haven’t applied for any credit since September 2015 and I believe my score should have stayed where it was,” David told Fairfax Media.

It’s quite clear the credit scoring system is flawed.

The problem is, the banks rely so heavily on it when deciding to lend money, that it could impact millions of people in the long-term.

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