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Need Finance – Your identity is the key to your credit rating – keep that key safe with our tips for protecting your identity.
Most of us don’t even think about our credit files until we need finance but your credit file is one of your most important personal assets.
So what is a credit file and a credit rating?
Veda Advantage is the main credit reporting agency in Australia and holds credit information about most Australians.
If you have ever applied for a loan, signed up for a credit card or even opened a post-paid mobile phone account you most likely have a credit file.
Your credit file includes information about any credit activity in the last seven years, including:
- Date(s) of application
- Your role as an applicant – personal, joint or guarantor
- Name of the Financier that you applied to
- Amount of money that you wanted to borrow
- Type of credit and the purpose of the loan.
It also contains your personal details and additional credit information including:
- Records of current credit enquiries.
- Any payment defaults you may have had.
- Whether you have been Bankrupt in the past or had any court judgements.
- Public record information such as Directorships and Proprietorships
The information contained in your credit file determines your “credit rating”, as seen by the lender when assessing you for a loan approval.
When you need finance, an enquiry will be done by the financier on all occasions.
When you need finance, standard defaults remain on file for five years while bankruptcy stays on file for seven years, but these are not the only things that might influence a lenders decision.
Lenders may consider the number of credit applications you have made recently, the number of addresses shown in the last five years.
Need Finance – Paying your bills on time
Make sure you pay your bills when they are due. In most cases, where you may dispute the bill, it’s better to pay the bill as required and resolve the dispute afterwards (in the small claims court if necessary. You can also advise Veda Advantage that an amount is in dispute, preventing it as being listed as a default while the dispute process is in progress.
Contacting credit provider(s) if you anticipate any problems meeting your commitments
Whether it’s an unexpected illness, a banking error or a simple oversight, you should contact any credit providers if you believe you may have trouble meeting your obligations. This includes anyone who provides you credit, such as utility and telephone companies. This will help if you need finance at a later date.
Your call could prevent a credit file black mark. Keep communicating!
Controlling your credit applications
All too often people who need finance find themselves unexpectedly struggling to obtain a loan. Either making an application for a car loan or a motorbike loan, their credit file shows a large number of applications for credit in a short space of time. Sometimes this occurs because they have innocently applied with multiple institutions simultaneously.
Either way, a large number of credit applications in a short space of time is generally frowned upon by lenders. So it is important to apply for finance selectively and ensure you deal only with reputable and experienced finance brokers.
Your identity is the key to your credit rating and your potential to purchase. Protect your identity by:
Minimising your risk of identity theft
Take these simple steps to minimise your chances of identity theft:
- Sign credit and store cards as soon as you receive them
- Take care to secure your drivers licence, passport and other important personal documents
- Shred documents that contain your personal details and/or account details before you dispose of them
- Contact your financial institution if your cards, account details or PINs are lost, stolen or accessed
In the event of suspected identity fraud, contact police and your financial institutions immediately.
Checking your credit file regularly
You should check your credit file regularly to ensure that the activity listed matches your actual activity. This will allow you to have no problems when you need finance. For many victims of identity theft, unexpected activity on their credit file is the first sign that their identity has been stolen.
While a clean credit file is beneficial when applying for finance, a few blemishes doesn’t mean disaster.
Car finance is generally a secured loan which means the financiers will go a little easier in the information on the credit file. Motorbike finance is the same because the loan is again secured.
If you need finance or require information on anything we have discussed, please call our office on 1300 633 334.