Do you know what your credit rating is?

The majority of people don’t.  Is it important?  Yes, it most certainly is, especially if you will be applying for credit in the future, which most of us do several times throughout our lifetime.

Your credit file is a record of your credit history. It will detail your personal information, and information about enquiries made by credit providers. Your credit file can be useful to review before you apply for a loan or a credit card, for example. Perhaps you’re starting a business and require a bank loan, or you wish to see if there is any outstanding debt recorded in your name. Whatever your situation, it can be a useful first step to get a copy of your credit file and review the information held about your credit history.

The credit rating system in Australia allows you to contact a credit bureau to obtain your credit score. You can also obtain a copy of your credit file. This report contains important and relevant financial information about your financial history, which is exactly the type of information that lenders look for when deciding to assess and approve specific loans.

Clearly, defaulting on a loan will impact negatively on your credit rating, but there are other factors that can affect your credit rating adversely that may catch you unawares.

Below are four issues that to be mindful of.

1. Paying Utility Bills Late – do not underestimate the ‘fall out’ from this; it’s not just about getting the service temporarily cut, but any amount in excess of $150:00 that is 60 days or more overdue is recorded against your credit file as a default.
2. Moving House – do not forget to redirect your mail, otherwise your bills may not reach you, therefore ‘out of sight, out of mind’ and may not be paid – nor will you receive the reminders. Many people get their bills emailed to them nowadays, reducing the chance of this happening; but all the same be aware.
3. Loan/Credit Enquiries – every time you make an enquiry about credit, it is recorded on your file; too many enquiries in a short period of time can lead to a negative credit score.
4. Automatic Payment Defaults – if your credit/debit card has payments scheduled, ensure you contact the relevant institutions if your card has been lost, stolen or expired; otherwise you may inadvertently not pay a standing order which can be recorded as a default.