With the new credit reporting legislation fully implemented, now is the time to make sure your credit history is as clean as can be.
With credit providers now collecting and recording further information about your credit conduct, one small slip-up could mean the difference between the dream of home ownership and having to continue to rent for the forseeable future.
Repayment history information is designed to give credit providers enough information about you to assess whether or not you can afford to take on more debt, and how much you can afford to repay. It includes information about whether you make your payments on time or whether you have missed a payment, so it can include both positive and negative information about you.
Previously, lenders were only able to access negative information like major credit infringements, bankruptcy situations and declined applications for credit. Now lenders will be able to see all this plus account information for a variety of repayments including mortgages, personal loans, credit cards, utilities and more.
They will be able to access actual account information like the dates accounts were opened and closed, credit limits, type of credit account and 24 months repayment history on all your credit accounts.
Be protective about your credit history rating
The new data allowed under comprehensive credit reporting will give lenders access to your data as far back as March 2012. This may not appear on your credit report immediately, and not all credit defaults will appear because consumer credit defaults of less than $150 may be removed or omitted from your report entirely. Nevertheless, under the new system it’s important that you pay your bills on time.
To avoid accumulating a lot of minor defaults that can add up to make you appear as if you are under financial stress, you can pay the minimum amounts on your credit cards, loans and regular bills via auto-pay or direct debit to avoid being late.
Always make sure your name is removed from utility bills when moving house or vacating share accommodation. And take extra measures to protect your personal information to avoid minor fraud situations and identity theft. Remember, under the new system good credit behaviour will be taken into consideration and may make it easier for you to obtain a loan when you need one so paying your bills on time will be in your best interests.
Shopping around can damage your credit file
Some people shop around for credit and submit applications to several lenders and credit providers to see who will offer the best deal. Under the new credit reporting regulations, this may not be a good idea as each time you make an application, it is recorded on your credit report and may give a credit provider the impression that you’re under financial stress when you are not.
That means being rejected for credit could prove to be a black spot on your credit report. So to protect your credit history, you should only submit a credit application once you have made your choice of loan or credit product and done your best to make sure that you will be eligible for approval.
This is where the services of a mortgage broker come to the fore, your mortgage broker will only submit a credit application on your behalf once they have helped you thoroughly assess your personal financial situation and helped you to select the right loan product for your needs.
They will do all the legwork, shopping around for the best deal from a variety of different lenders and only submit your application to the one you finally select. They will also help you assess your eligibility and capacity to comfortably make repayments on any loan that you apply for, considering your other repayment commitments.
For more information about keeping your credit history in prime condition or how yours might affect your application for a mortgage or loan, speak with your mortgage broker today!