Keeping your Credit in check
Do you know we all have a credit record? Do you know what it says about you?
Your credit record simply details “bad” behavior, like bankruptcies, defaults, court judgements and also credit enquiries. A number of companies look at you and assess you in different ways, which usually results in a company refusing you credit compared to another company giving you credit.
These days, credit agencies only gather negative information such as defaults and bankruptcies but under comprehensive reporting, credit agencies will be able to collect extra information, including repayment histories.
Some ways to help keep your credit record at bay:
- Late Payments – Reporting will capture any late payments you make, even if they are only a few days late these will be noted. So try and make payments at least a day before or always on-time to avoid this. Most common late payments are recorded against credit cards, phone bills (especially mobile phone bills), utilities.
- Reduce your credit card limit: – High limits can hurt your ability of borrowing. It’s the outstanding limit on your credit card, not the balance, that counts. “This can be particularly damaging when applying for a mortgage because having a $10,000 limit even with nothing owing can reduce the amount you can borrow by tens of thousands of dollars,” says Mortgage Choice broker John Manciameli.
- Learn from your mistakes – If you are young and have a credit record already, then take note as this will be on your report for a minimum of 5 years , so hopefully it will be gone by the time you are looking for a house or car purchase. Creditors look at how long ago your last record was so a default from years ago is less damaging than a default in recent months.
- Limit your options – Shopping around can also lead to records being added to your credit report. Most lenders make enquiries to check if you would qualify for credit. Even if you dont buy anything or take up the offer, these can be interpreted as a refusal.
- Any default counts – No matter how small the default maybe, it could end up in the refusal of a loan in the future.
- Joint agreements/contracts – Keep an open mind when opting for a joint contract. If the person on the other half doesn’t keep up there end of the bargain this will also affect your credit rating. This is especially common in divorce settlements.
- Know whats on your credit record – Regularly check your credit record is accurate. Veda Advantage offers you free access to your file which usually takes around 10 days to receive. Also you can receive an e-mail notification every time a credit application is made using your personal details.
All in all, if you are looking at credit, remember to keep these points in-mind. You dont want to be refused that dream car, house or boat just because of a few small defaults that you had years ago. Best way to avoid this is to make sure you live within your limits and keep up your payments on a regular basis.
