New data reveals Australia's biggest credit report myths

Most Australians use credit in some form, from credit cards to home loans to buy now, pay later (BNPL) services. But despite its everyday role in our finances, recent research commissioned by CreditSmart has found that many of us still misunderstand what's really on our credit reports.

According to the research, 33% of Australians have never checked their credit report, and fewer than one in four know it includes repayment history.

Worryingly, misconceptions about what's included are growing, with 50% of Australians wrongly believing that annual income is recorded on their credit report (up from 33% last year).

Another 46% wrongly think it shows their age (up from 31%), while 37% assume it includes their savings balances (up from 26%).

With 80% of Australians using some form of credit, understanding how credit reporting works is critical. Misconceptions can stop people from seeking help, encourage reliance on myths, and leave them vulnerable to costly mistakes. Here are three of the most persistent credit myths, and what we can learn from them.

Myth 1: Financial hardship ruins your credit score

One of the most common misconceptions is that asking for financial hardship assistance leaves a permanent black mark on your credit file. In reality, that's not the case. By law, hardship information cannot be included in your credit score.

A hardship arrangement is not recorded as a missed payment, and while a note is added to your credit report, it's removed after just 12 months - far less than the five years a default stays on your credit report.

In fact, CreditSmart's research shows that among Australians who accessed hardship assistance, more than half (55%) were later approved for new credit.

Only 13% were declined, demonstrating that hardship support doesn't block future borrowing opportunities. Yet one in five people who needed help didn't ask for it, with 43% unaware that assistance was even available.

The myth that seeking support will damage your credit means that too many Australians are struggling in silence. In reality, hardship arrangements exist to provide breathing space, not punishment.

By avoiding help, people risk falling further behind, when a simple conversation with their lender could protect their credit report and future borrowing power.

Myth 2: Checking your credit lowers your score

Another common misconception is that checking your own credit report will hurt your score. The truth? Looking at your own report is what's called a 'soft check', visible only to you, and invisible to lenders.

Your credit score only changes when a lender makes an inquiry, such as when you apply for a loan or credit card, or if other information is added to or removed from your credit report.

Checking your own report is safe and important. It helps you stay on top of your financial health, spot errors, and detect fraud early.

Despite this, almost half of Australians have never checked their report. CreditSmart recommends requesting a free copy every three months from each of the major credit reporting bodies (Equifax, Experian and illion).

To do this, you'll need to complete a request form with each one and provide proof of identity (like your driver's licence or Medicare card). Your report can then be sent to you by email or post, depending on what you choose.

Encouragingly, younger Australians are leading the way in taking ownership of their credit: 93% of Gen Z now seek advice about credit, up from 84% last year.

Many are turning to banks, financial advisers, and online resources rather than expensive 'credit repair' companies. Credit repair services can be misleading by promising quick fixes, while charging high fees.

Myth 3: Buy now, pay later isn't really credit

BNPL has exploded in popularity, now used by one in five Australians. But many consumers still see it as separate from traditional forms of credit.

However, BNPL is legally recognised as credit under the National Consumer Credit Protection Act. From June 10, 2025, new BNPL accounts and limit increases are subject to responsible lending laws, including credit checks.

Some BNPL providers now also share repayment history with credit reporting bodies, meaning missed payments could appear on your report. Repeated applications or late payments are more likely to affect your score than simply having a BNPL account.

BNPL can be convenient, but it's not a free pass. Consumers need to understand that it works like any other form of credit, with the same responsibilities and potential consequences.

CreditSmart is urging Australians to get informed, check their credit reports regularly, and make decisions based on facts rather than fear. Ultimately, your credit report is a tool, not something to be scared of.

By understanding what's on it, you can spot issues early, take action sooner and reach out to your lender for help before small problems become big ones.

Get stories like this in our newsletters.