10 May 2010

What Do You Know About Your Credit Rating?

Have you ever checked your own credit report?

“Credit fraud is a growing issue all over the world. If you do not check your file you will not know if someone is using your identity to borrow money – until it is too late.” Veda Advantage Were you aware that even applying for a mobile phone contract can be listed on your credit report?

The information listed on your credit report includes your:

  • full name
  • date of birth
  • driver’s licence number
  • gender
  • employer
  • latest and previous addresses
  • applications for credit, when, with whom and for what type of credit, and
  • payment defaults.

Were you aware that your credit report does not contain any POSITIVES such as paid up loans, accounts or credit cards? The Australian credit reporting system only tracks negative information. Therefore you could be regularly paying all your bills (mortgage, electricity, rates, car repayment, school fees, store card) and yet be in a dispute, for example with a telephone carrier, and only the disputed account will be recorded on your file!

Every time you apply for credit the application is listed on your report, but whether you actually accept and use the credit is not recorded. Even simply making enquiries with different lenders (without lodging an application) may show on your report! This could leave your credit rating looking like it is in tatters, which in turn may make applying for a loan tricky.

The best way to ensure your credit rating stays healthy is pretty clear – make sure you pay your bills on time! If you do foresee a problem with an account, call the credit provider and work out a payment plan. Most people check their bank and credit card statements. You should also check your credit report on a regular basis as well. This gives you the opportunity to check your history to ensure there has been no fraudulent enquiries.

Defaults and unpaid accounts stay on your credit history for five years, so it makes sense to review your credit report.

You are legally entitled to have unfair, incorrect or disputed entries removed. The banks can be very reticent to lend if a credit file shows a default amount. Gen Y is the biggest area of concern. According to recently released figures one in five people applying for bankruptcy are under 30. While an unpaid account stays on your credit report for five years, a bankruptcy filing hangs on for seven with a permanent record of your bankruptcy held on the National Personal Insolvency Index (which is accessible by anyone willing to pay a fee).

There are companies that specialise in resolving and removing incorrect entries from your credit report, however do your research before embarking on what could become a lengthy and costly exercise! One of the most common reasons a black mark appears on your credit report is simply due to an address change without a mail redirection being lodged. It costs less than $40.00 to have your mail redirected by Australia Post for a six month period. This should give you plenty of time to let all your creditors know that you have moved!

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