Unless you are really opposed to debt, you have most likely applied for a myriad of types of credit. These enquiries will have affected your credit file.
Have you taken out a home loan, car loan or lease, personal loan, credit cards or interest free deal? If you have, then before you apply for credit again get the facts straight on how these can impact your credit file.
Listed below are a few common myths we've debunked about your credit file.
Credit reporting bodies are responsible for my credit being approved or declined
In Australia there are two main credit reporting agencies – Veda (previously Baycorp) and Dun and Bradstreet. These bodies maintain a database of credit related data on individuals in Australia. Although they give a score to individuals, they not able to provide recommendations. They provide reports on your history and the lender makes a judgement about what it contains. Being approved or declined is up to the lender.
Checking my credit file too often will affect my score
You are able to look at your credit file as often as you like. It is actually recommended that you periodically review your credit file so you know what it contains and if there are any errors or new listings that you are able to investigate to ensure that they are valid. To get a free copy of your credit file visit www.mycreditfile.com.au.
The more credit I have applied for, the better my score
If a lender makes an enquiry about your credit file, it will be noted on your credit file regardless of whether you obtain the loan or not. Too many enquiries can have a negative impact on your credit score. If you have a number of credit enquiries from a number of different lenders in a short time frame, it may look like you are stretching yourself financially or that you were unable to successfully acquire credit. Lenders are very cautious when they see a large number of credit enquiries.
Giving a lender permission to check your file should be only be done if you have done all your research and are ready to apply. Having a casual chat to a car salesperson should not warrant a check so always take care when you are chatting to providers about finance.
If I meet my repayments, I don’t need to check my credit score
You may think that you do not need to keep an eye on your credit file if you always meet repayments. However, mistakes can be made and defaults can be listed without you knowing it. Moving house can be a prime time for credit providers losing track of you and not be able to notify you of an outstanding bill. Checking your credit file at regular intervals can alert you to listings like this that you can remedy straight away rather than finding out years later when you apply for credit.
The more loans I have the better my score
Your credit file will list your current commitments. While having a credit history can help show a lender that you make repayments on time, having lots of commitments without many assets to show for it, could have the opposite effect. Lenders need to see that you will have enough money spare to meet repayments, so this will impact how much you may be able to borrow.
Before you apply for a new credit card, loan or interest free deal, it is important to reduce your current debt as much as possible. If you pay off as many credit cards and loans as you can, particularly the ones with a high interest rate, not only will you have more money to spare, but it will provide the lender with a strong repayment history.
I know I have defaults, so I have stopped even trying to apply for credit
Many people with bad credit can be reluctant to apply for a home loan or other credit because they have been previously declined and told that they can’t get a loan. However, for people who have moved on and want to get on with their life there are viable options to consider.
Lenders like State Custodians have a range of home loans specifically designed for borrowers who have a bad credit history. It is well worth chatting about your options so you know where you stand. This can be done by calling our Lending Specialists on 13 72 62 or sending an email to firstname.lastname@example.org.
I can’t get an idea about how much I can borrow without submitting an application
There are lots of calculators online that will give you a good idea or how much you may be able to borrow. If you are looking for a quick indication, that doesn’t involve a credit enquiry, try out Instant Pre Approval here. Follow this up with a chat with our Lending Specialists who can run through all the relevant questions over the phone and do a more thorough calculation and advise you on your maximum borrowing limit. Verifying your information, supplying documents like payslips and allowing the lender to conduct a credit enquiry will happen when you actually apply. Having your application formally approved is the final step.
Whether you are interested in how much you can borrower, casually shopping around for a home loan or are ready to apply, our team can help. At State Custodians, we work hard to find solutions for borrowers. Give our expert Lending Specialist team a call on 13 72 62 or leave your details here and they will contact you.