Understanding credit in Australia

The basics

What is credit?

Credit is money you borrow from a bank or other financial provider which you have to pay back at a later date.  The amount you borrow is called debt and the bank or financial provider you borrow it from is called the lender. 
When you borrow money in Australia you have to pay the debt back, plus any interest and fees charged by the lender to borrow that money. When you see an advertised rate you may also see a comparison rate. A comparison rate includes the interest rate or weekly repayment amount, plus most fees and charges. It is important to look at the comparison rate when comparing loans. Read Lending interest rates explained for more information.

Why use credit?

Credit can help you get what you want or need now and is particularly used for large purchases you do not have enough savings for, such as a car or a house. 

Types of credit

Credit can be given in many different ways. Heritage offers three main credit types to approved applicants:

Home loan

  • A loan to buy a home
  • The money is borrowed over a set period of time, usually 25 to 30 years
  • Once the money is paid back the loan is closed

Personal loan

  • A loan to buy a car, holiday or other approved purchase
  • The money is borrowed over a set period of time, usually 1 to 7 years
  • Once the money is paid back the loan is closed

Credit card 

  • Has a set limit usually starting from $1,000
  • Used for small ongoing purchases
  • Designed for you to spend the money up to the limit, and pay it back each month to avoid interest
Getting credit in Australia

If you apply to borrow money from a bank or financial institution, you will be asked questions about your income and expenses. This is to help ensure you can afford the loan. You will need to confirm this information with documents like pay slips and account statements.

If you apply for a Home Loan, Personal Loan or Credit Card from Heritage Bank, you must be working and living in Australia and be:

  • Aged 18 Years or older and
  • Either a citizen or permanent resident of Australia or New Zealand.
Lenders will also review your credit history, by checking your credit report.

What is a credit report?

A credit report is a document that summarises how you’ve handled your credit accounts in the past, and contains information collected from a number of different sources. Lenders access your credit report in order to help determine your suitability for a loan when you apply for credit. When you apply for a loan or credit card in Australia, it will be recorded on your credit report. Learn more, including how to obtain a copy of your report by reading What is a credit report?
Applying for credit

When applying for credit, it is important to understand the features of the credit product, and how much it will cost you. You may like to consider comparing interest rates, fees, and product features via a comparison website or by speaking directly with financial providers. 
Understanding credit and loans can be difficult. To help you through the process visit our Migrant Liaison Officer Service page or call our and a Queensland based contact centre on 13 14 22. 

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