Applying for a home loan, credit card or mobile phone card? Whatever type of loan or credit you apply for, the decision to approve or reject your application can come down to your credit report.
Lenders and credit providers use your credit report to determine whether you can afford to make the repayments and how reliable you will be at making them on time. Your credit report is based on your financial behaviour and includes information on your credit cards and loans, including your punctuality in making repayments.
Since 12 March, credit reports have included additional information, such as every individual’s repayment history on credit cards, home loans and personal loans that has been collected from December 2012.
Alex Parsons, CEO of Ratecity, said, now is a great time for Australians to assess their credit report and, if required, take some positive steps towards rectifying their current situation.
“Banks now have more insight into individual’s credit files so consumers will need to be diligent in making an effort to improve, because the banks will be watching.”
Take charge of your credit rating
If you are applying for a new loan or even to increase the limit on an existing loan or credit card, it’s a good idea to check your credit rating to ensure there are no mistakes that could affect your chances of approval.
If you miss a payment on a debt – the default amount can be as low as $150 – it gets recorded on your credit report once 60 days or more have passed from the due date for payment. A credit default remains listed on your credit report for five years, even once it’s paid – although the report will show that the repayment was made.
You can request a copy of your credit record from the credit reporting agencies, such as Veda. You will need to provide your full name, current and previous address, date of birth and a copy of your driver’s licence, passport or proof of age card. You will also need a document issued by an official body that shows your name and address – such as a bank statement, rates notice or an electricity bill.
Reports are free and generally take 10 days to receive. If you are in a hurry, Check Your Credit can provide you with your credit report in one business day for $30.
There have been cases of incorrect negative listings on credit reports so if you find a mistake, you can take steps to correct the problem. Mistakes could include a default wrongly listed on your credit report due to a processing error or a debt may be listed twice. The credit reporting agency you use can help you correct any mistakes.