What Is a Credit Guide and Why Should You Read It?

When you are considering a loan, it can be easy to focus on how much you may be able to borrow and what the repayments could look like.

However, there is other important information worth checking before you make a decision. You should understand who you are dealing with, how the credit provider is regulated and what options are available if something goes wrong.

That is where a credit guide can help.

A credit guide is a disclosure document containing important information about a credit provider or credit assistance provider. It can help you confirm who you are dealing with, understand relevant responsible lending obligations and find out how to make a complaint.

At Sunshine Loans, we make our Credit Guide available online so that you can review this information before deciding whether our product may be appropriate for your circumstances.

What Is a Credit Guide?

A credit guide provides preliminary information about a business engaging in regulated credit activities.

ASIC explains that a credit guide will generally identify the business, provide its contact details and Australian Credit Licence or credit representative information, and explain how complaints are handled. Depending on the type of credit activity involved, additional information may also be required.

The timing of the guide can vary according to the type of business and credit activity. ASIC says it will generally be provided before the business engages in relevant credit activities with you, although exemptions can apply in some situations.

A credit guide can help you understand the business providing or assisting with credit. However, the document alone does not tell you whether a particular loan will be affordable or appropriate for your circumstances.

You should separately consider the proposed repayments, fees, interest, loan term and your broader financial position before entering a credit contract.

What Information Does a Credit Guide Contain?

The exact information can vary depending on whether the business is a credit provider, credit assistance provider, credit representative or another type of credit service provider.

ASIC states that a credit guide generally needs to include the entity’s name, contact details, Australian Credit Licence or credit representative number, and information about its dispute resolution procedure. Different requirements can apply depending on the entity’s role.

Here are some of the main areas you may find in a credit guide.

The Provider’s Identity and Contact Details

A credit guide should help you identify the legal entity responsible for the relevant credit service and explain how you can contact it.

Check these details against the other important documents you receive.

A business may use a trading name that differs from its registered company name, so it is worth reading this section rather than relying only on the branding shown on a website.

For our product, we operate as Sunshine Loans Pty Ltd. Our current Australian Credit Licence number is 390556, and our ACN is 092 821 960.

Australian Credit Licence Information

A credit guide will generally include an Australian Credit Licence number or, where relevant, a credit representative number.

This information helps you identify the authorisation under which the relevant credit activities are being carried out.

Holding or being authorised under a credit licence does not mean a particular loan is automatically suitable for you. You still need to review the proposed contract and consider your own financial circumstances.

Complaint and Dispute Resolution Information

Your credit guide should explain how you can raise a complaint directly with the business.

This is generally referred to as the internal dispute resolution process.

The guide may also provide details for the Australian Financial Complaints Authority, or AFCA. AFCA provides consumers and small businesses with a free, fair and independent external dispute resolution service for eligible financial complaints that have not been resolved directly with a financial firm.

Our Credit Guide explains how you can make a complaint to us and provides AFCA’s contact information if an issue cannot be resolved to your satisfaction through our internal process.

Keeping these details somewhere accessible can be useful if you later have a concern about your account, repayments, fees, communication or another aspect of the loan.

Responsible Lending Obligations

A credit provider’s guide may explain the responsible lending obligations applying to its assessment process.

These can include:

• Making reasonable inquiries about your requirements and objectives.
• Making reasonable inquiries about your financial situation.
• Taking reasonable steps to verify relevant financial information.
• Assessing whether a proposed credit contract would be unsuitable.

For our applications, we may therefore need information about your income, regular expenses, existing financial commitments and other relevant circumstances.

You should provide accurate information and genuine documents so that we can properly assess your application.

Providing the requested information does not guarantee approval. We assess applications individually and may request additional information where necessary.

Your Right to Request a Suitability Assessment

A credit provider may prepare a written assessment dealing with whether a proposed credit contract is unsuitable.

You can ask for a copy in certain circumstances.

ASIC states that when you request a credit provider’s assessment within two years after the start of a contract, it generally needs to be provided within seven business days. If you request it after two years but within the applicable seven-year period, the general timeframe is 21 business days.

Our Credit Guide also explains that if you request a copy of our suitability assessment before entering the credit contract, we must provide the written assessment before you enter the contract.

You can review our Credit Guide for current information about requesting a copy.

Why Should You Read a Credit Guide?

A credit guide can look like another formal document in the borrowing process, but the information it contains can help you make a more informed decision.

1. You Can Check Who You Are Dealing With

Online borrowing can sometimes involve several business names, websites or service providers.

A credit guide helps you identify the entity responsible for the relevant credit activity and locate its licence information.

If important details across a website, email, credit guide or contract do not appear to match, stop and clarify the position before providing sensitive personal or banking information.

2. You Can Understand the Business’s Role

Not every business involved in arranging a loan is necessarily the credit provider.

Some businesses provide credit assistance, which can include helping you apply for credit offered by another provider.

ASIC’s disclosure requirements vary according to the role being performed. For example, credit assistance providers can have additional disclosure requirements relating to fees, indirect remuneration and the credit providers with which they conduct business.

Understanding the role of each business can help you determine who is making the credit decision and who you should contact if you have a question.

3. You Know How to Make a Complaint

You may never expect to need a complaint process when taking out a loan, but it is still useful to understand how it works.

Reading the credit guide tells you how to raise an issue directly and where you may be able to go if it is not resolved.

For our customers, our Credit Guide sets out our internal dispute resolution contact details as well as information about AFCA.

4. You Can Better Understand the Assessment Process

You may be asked for detailed information about your income, expenses and financial commitments during a credit application.

These questions help us understand your financial circumstances and assess your application.

Our responsible lending obligations include making reasonable inquiries about your requirements, objectives and financial situation, taking reasonable steps to verify your financial situation and assessing whether a proposed credit contract would be unsuitable.

5. It Can Highlight Questions Worth Asking

Reading a credit guide may prompt useful questions before you enter a contract, such as:

• Who is actually providing the credit?
• What Australian Credit Licence or credit representative number applies?
• Who should I contact if I have a complaint?
• How can I request a copy of the suitability assessment?
• Which documents explain the interest, fees, repayments and other loan terms?

You do not need to wait until after entering a contract to ask questions about something you do not understand.

Is a Credit Guide the Same as a Credit Report or Loan Contract?

No. These documents have different purposes.

Your credit report is about your credit history.

Moneysmart explains that your credit score is based on personal and financial information held in your credit report.

A credit guide, by contrast, provides information about the business providing or assisting with credit.

It is also important not to assume that a credit guide will contain every financial cost associated with the proposed loan. ASIC notes that a credit provider’s guide does not generally need to contain fees, charges and indirect remuneration.

That is why you should also read the proposed credit contract and relevant loan cost information.

What Should You Read Alongside a Credit Guide?

A credit guide is only one part of the information you should review before borrowing.

You should also check:

• How much you will borrow.
• The amount you will repay overall.
• The interest rate and applicable fees.
• The amount and frequency of repayments.
• What can happen if you miss a repayment.
• Any relevant early repayment terms.
• Hardship and complaint procedures.
• Whether the repayments fit your budget after essential expenses.

Moneysmart recommends comparing factors such as interest, fees, features and overall costs when considering a personal loan. It also warns that missing repayments can result in additional costs and make it harder to keep the loan on track.

Before deciding to borrow, consider whether another suitable option could meet your needs at a lower cost. Depending on your circumstances, that could include savings, a payment arrangement with a service provider, hardship assistance or a no-interest option for eligible essential expenses.

Reading Our Sunshine Loans Credit Guide

We provide an unsecured Medium Amount Credit Contract to eligible applicants.

Our current loan amounts range from $2,050 to $3,500. Amounts above $2,500 are limited to eligible returning customers who have successfully completed two Sunshine Loans on time.

Our current loan terms range from 63 to 182 days.

The maximum Annual Percentage Rate is 48% per annum, and a $400 establishment fee applies. A $35 failed-payment default fee may apply if you fail to make a scheduled repayment. We do not charge account-keeping or other regular fees.

Applications are subject to our eligibility requirements, assessment and approval. Receiving or reading our Credit Guide does not mean your loan has been approved.

You can review our:

• Credit Guide for our licence, responsible lending and complaint information.
• Loan costs for current interest, fees and repayment information.
• Loan eligibility requirements before deciding whether to apply.

These pages contain different information and are designed to be read together when you are considering our product.

A Simple Credit Guide Checklist

Before moving ahead with a credit application, ask yourself:

• Does the guide clearly identify who is providing or assisting with the credit?
• Can I find the relevant Australian Credit Licence or credit representative number?
• Do the business details match the other important loan documents?
• Do I understand how my application will be assessed?
• Do I know how to request a copy of the suitability assessment?
• Do I know how to make a complaint?
• Have I separately reviewed the interest, fees, repayments and contract terms?
• Can I meet the proposed repayments without missing essential expenses?

Receiving a credit guide does not mean a particular loan is suitable for you.

Consider your budget, available savings and other suitable alternatives before deciding to borrow.

Frequently Asked Questions About Credit Guides

Is a Credit Guide the Same as a Credit Score?

No.

A credit score is calculated using information held in your credit report. A credit guide is a disclosure document containing information about a credit provider or credit service provider.

Moneysmart explains that your credit score is based on personal and financial information contained in your credit report.

Does Receiving a Credit Guide Mean My Loan Is Approved?

No.

A credit guide explains information about the business and relevant obligations. It is not a loan approval.

When you apply with us, approval depends on our assessment of your application, your circumstances and whether you satisfy our applicable requirements.

Will a Credit Guide Show the Exact Cost of My Loan?

Not necessarily.

ASIC states that a credit provider’s guide does not generally need to include fees and charges.

You should read your proposed credit contract, repayment information and relevant cost disclosures to understand the financial terms applying to the loan.

For our current product, you can review our loan costs page before deciding whether to apply.

What Should I Do if I Do Not Understand the Guide?

Ask questions before entering the contract.

For questions about our documents, an existing application or your account, you can use our contact and support information.

Do not sign a credit contract until you understand the important terms and costs that apply.

Can I Complain if I Think Something Has Gone Wrong?

Yes. You can raise a complaint with us through our internal dispute resolution process.

Our Credit Guide contains the current details for doing so.

If we cannot resolve an eligible complaint to your satisfaction, you may be able to contact AFCA. AFCA provides a free, fair and independent external dispute resolution service for eligible complaints.

Should I Keep a Copy of the Credit Guide?

Keeping a copy can be useful, particularly because published contact information or documents can change over time.

You should also consider retaining your credit contract, repayment schedule, statements and important correspondence relating to your loan.

Read the Information Before You Decide

A credit guide will not make the borrowing decision for you, but it can help you understand who you are dealing with, the obligations that apply and what you can do if something goes wrong.

Before considering one of our loans, review our Credit Guide, check our current loan costs and eligibility requirements, and consider whether the repayments would be manageable alongside your essential expenses.

Our applications are subject to assessment and approval. Borrowing should be considered only after you have reviewed the costs and any suitable alternatives available to you.

The information provided in this blog is for general informational purposes only and does not constitute financial advice. It is not tailored to the specific circumstances of any individual. Before acting on the information, you should consider whether it is appropriate for you, having regard to your objectives, financial situation and needs.