How healthy is your credit?

There’s only one way to ascertain how ‘healthy’ (or sickly) your credit is. You need to obtain and examine your credit report. Consider the following tips when assessing your credit report and improving (where possible) the likelihood of securing future credit.

Your credit report is your credit resume – and credit providers will assess it just as prospective employers would your CV.  How well it presents will determine the likelihood of obtaining credit, just as your CV would in obtaining a job.

1. Check for errors on your Credit Report

Your credit report or profile is more than just a collection of who your creditors are and how much or frequently you have applied for credit and how much you owe them or have paid them.

The first thing you need to do is carefully check that your credit report is accurate.  There are over 14 million credit files in Australia with over 20% containing an adverse credit listing, Further it has been estimated that anywhere between 30-70% of all Australian credit files contain errors.

These errors may be as simple as an incorrect middle initial or a wrong address. Or it could be as serious as a creditor reporting that you defaulted on account – when in fact you do not even have any credit with that provider.

Carefully examine your credit report and if you find an error contact your creditor and Equifax or Dun & Bradstreet (the two major credit file holders in Australia). Address these issues as soon as possible in order to ensure you file is kept accurate.

2. Correcting errors on your Credit Report

If you find an enquiry, default or other listing that is not yours, you need to contact the credit  provider immediately. Errors such as these can have dire consequences to your credit capacity and are potentially issues of identity theft. In many cases however it may simply be a genuine error or oversight.

In either case, the problem can and should be corrected. You will need to contact both the credit provider and the credit agency (Equifax) in writing to ensure the matter is investigated and rectified.  Ensure you keep call logs & copies of any correspondence.

3. Minimise the number of enquiries on your credit file

Banks, mortgage insurers and other lenders often review the nature and amount of inquiries on your credit report when assessing your eligibility for credit. Often borrowers can be declined for credit because, particularly with mortgage insurers when they are ‘credit scored’ (penalised for having too many credit equines in recent history.

This is often the case where a borrower may be shopping around for finance with multiple credit providers who have accessed their credit file. In some case this diminishes the applicants ability to obtain credit. Be careful who you let access your credit report to avoid this issue.

4. Repairing your credit history

Even one negative listing on your credit report has the potential to affect your ability to obtain credit. Whilst it does not prevent most people from obtaining credit, the nature and type of credit you will be eligible for is often quite different to that of a borrower with a clean credit history. Redrock has particular skills in dealing with credit impaired or bad credit circumstances and our relationship with credit repair firms can assist you with removing adverse credit listings from your credit report.

A restored credit report can mean saving you thousands in monthly repayment obligations on your current loans, by refinancing to much cheaper alternatives

5. Check your Credit Report regularly

Check your credit report regularly. You can pay an annual fee to Veda to receive notification whenever there are changes to your credit file, known as a credit alert service. This is a safe way to ensure you always know where you stand in relation to your credit history. You need to treat your credit history similar to your medical history.  Monitor it, have regular checkups and contact the necessary professionals when needed to ensure it stays ‘healthy’.

If you have a credit issue that is impacting your ability to obtain the finance you deserve and would like some professional advice, contact us today