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How To Get and Protect Your Credit File

Updated: Jul 14, 2023


 

Ever heard the saying that your reputation is more valuable than gold?Well in the finance world, when it comes to borrowing money, your credit reputation (A.K.A. your credit file) is one of your golden tickets to getting any loan approved.


Whenever you apply for credit, lenders will have a squiz at your credit file to assess your creditworthiness. They want to see if you’re someone who’s trustworthy enough to lend money to or not.


So, every time you apply for new credit (whether it be a credit card, car loan, home loan, personal loan, payday loan, or even a mobile phone plan), all those new enquiries are recorded on your credit file, along with how you conduct them. From your credit file lenders can see all your credit history information.




Your credit file tells lenders a whole lot about you

It tells them how often you ask to borrow new money, how good you are at servicing the debt you already have (by revealing your last 2 years repayment history on each account), and if you have any defaults or bankruptcies against your name.


Therefore, protecting your credit file is super important! If there are any discrepancies or black marks on your credit file, it can have serious consequences on your ability to be approved for any loans in the future.



So how do you get your hands on your credit file?

There are four credit reporting bureaus here in Australia: Equifax, Experian, Illion and Creditor Watch. Below are links to the websites where you can obtain a free copy of your credit file (also referred to as your credit report):



Make sure you have identification on hand, as you’ll need it to confirm your identity to obtain a copy of your credit file. There are also the options to pay for your credit file and receive regular alerts and updates. You’ll find more info on that through the links above.


Interestingly, not all agencies will have the same information on their records, so your credit file can vary between each agency (some info can be shown on one credit report, while missing on a report from another credit agency). If you have concerns that you could have some red flags showing on your report, you may like to get copies of your credit file from more than one agency to double check what’s being displayed.



How to protect your credit reputation and avoid red flags

So, you’ve got a copy of your credit file in your hot little hands, how do you keep it safe?

How do you make sure your golden ticket remains bright and shiny for future use?

Here are three quick tips that you can implement now that will see you laughing all the way to the bank, later:

  1. Pay all your bills on time - if you’re late regularly, it will show, and the lenders will know! Brownie points to you if you pay them on time, and extra brownie points for paying bills before the due date! Consider automating expenses where the cost doesn’t change too. Setting up automatic direct debits will mean one less bill for you to think about and manage each month - making your to-do list smaller – and who doesn’t want that? (Yes please!)

  2. Limit applying for new credit - frequent and multiple new loan enquiries for consumer credit such as credit cards, personal loans, payday loans, and even car loans don’t bode well for your credit reputation. If you’re tempted to apply for new credit, think of this:

If you can’t afford to buy something with your own cash, don’t buy it.

Your credit file will thank you, and you’ll thank yourself later too :)


3. Reduce the number of debts that you have - especially if you’re planning on applying for a home loan soon, lenders don’t like to see more than four consumer debts listed as current liabilities on your loan application. So f you have four or more credit accounts (for example a car loan + two credit cards + two personal loans, totalling five consumer debts - or maybe you have more), look to reduce them down to four or less (this applies to couples too - less than four combined).


You can do this by making extra repayments to clear the debt sooner or by consolidating debts and paying extra on the new consolidated loan to smash it right down.



How to protect your credit reputation and avoid red flags

The less frequency and number of loan enquiries, less late payments and a smaller number of debts shown on your file, means a more favourable credit report. Plus, more options and flexibility for you when you need it most.


Protecting your credit file is so valuable. I would argue that your credit reputation is as valuable as gold - because without a reputable one, you can’t get the gold!

Jaleesa x


 


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