Do You Know What’s in Your Credit File? 

The state of your credit file is crucial when applying for finance – so why is it that so few of us know how our credit stacks up?

In today’s digitally driven world, consumer choices are heavily impacted by ratings. They are even used to decide the best restaurants, television programs and hotels.

Similarly, lenders rely on a rating system – or credit file – to help assess a borrower’s suitability for a loan. Having a poor rating can make it more difficult to be approved for finance, yet very few Australians actually know their full financial history or how this could impact their future.

Heidi Armstrong, Head of Consumer Advocacy at Liberty gives you the top 3 reasons why every person should check their file.

If the credit file isn’t great, plan around it

Having a poor file will heavily reduce a borrower’s options when applying for finance. In fact, the strict assessment criteria of many traditional lenders will mean they simply won’t consider an applicant with a history of bad credit.

Viewing your own personal file before applying for finance allows borrowers who have a poor rating to source a more flexible lender from the get-go.

This avoids unnecessary “hits” (notations made by each lender with whom an application is made) on the file which might further deteriorate the credit score.

Wait before applying for future finance

Knowing the cause of poor credit history might mean it makes sense to delay any application for finance. Credit enquiries, defaults, clear-outs and court judgements remain on a person’s file for five years.

If a borrower has a default listed on their file that is due to drop-off in three months, then it might be worthwhile making the application after the default has been removed.

To ensure there are no mistakes on the file

Let’s be honest – sometimes mistakes happen. In fact, the Office of the Australian Information Commissioner reported in 2013 that 30 per cent of credit files have an error on them, from little mistakes such as incorrect name data right through to false records of unpaid defaults.

So, it’s a good idea to regularly check a file to ensure there are no mistakes. 

How can you access your file?

Finding out what’s in a credit file is easy, anyone can go online and will be provided with a record of their financial history including applications made with credit providers and any defaults.

There is usually a cost associated, however, some agencies will provide a basic overview for free. Unlike when lenders look into a file, if a borrower requests to see this information it does not appear on the file as a “hit” or impact their chances of receiving approval for finance.