Credit History – How Does It Work?
If you have ever borrowed money for a credit card, car, mortgage, etc., chances are that you have a credit history and therefore a credit file. Your credit history is a paper trail that most lenders rely on when deciding whether to give you a loan or not.
More on Your Credit History and Your Home Loan Application
If you need more information on how your credit history affects your home loan application or would like to talk to a mortgage broker about home loan options that are in your best interest, call us on 13 LOAN (or +61 2 9249 3739 for international callers) or email us the form on this page and we will return your contact within 2 business hours.
Your Credit File
Your credit file contains your credit history and will usually contain:
- Personal details such as: name, residential addresses, date of birth, drivers licence number and current or previous employer.
- Credit applications and enquiries you have made during the past five years.
- Records of some current credit accounts.
- Overdue Accounts (Defaults) which may have been listed against your name.
- Bankruptcy Act Information.
- Court Judgements and Writ & Summons.
- Public record information such as Directorships and Proprietorships.
How to Access Your Credit File
Everyone can access their own credit file and if you are applying for a loan of any kind, it is a good idea to check yours before proceeding. There is a small fee for accessing the file and it can be obtained by visiting My Credit file – Veda Advantage
Maintaining a Clean Credit File
Keeping a clean credit file is fairly straightforward. Most people with blemished files don’t even realise they have an issue. Here is how to keep your credit file clean:
- Pay bills on time. An overdue account is usually a debt that has been owing for a minimum of 60 days (overall accounts where the debtor has been “confirmed missing” remain on the database for seven years).
- Review your credit file to make sure there are no errors in the information and/or discover any overdue accounts that have been forgotten about. A file Update Form is available to request corrections.
- Monitor your credit file to ensure someone is not fraudulently using your identity (a growing problem worldwide).
- Don’t make too many applications for unsecured finance. Each one shows up on your credit report and multiple inquires can be an issue for some lenders.
- Remember that the details on overdue accounts, even when paid, remain on your file for five years from the date of listing, as part of your credit history.
When Am I Considered Credit Impaired?
There are two ways you can get a bad credit rating or come to be considered credit impaired:
- If you have ever been declared bankrupt.
- If you have defaults appearing in your financial record.
With a Bad Credit History, Can I Get a Home Loan?
The answer is that it really depends on your situation and how serious the default was. In today’s lending market, there are specialist lenders who offer home loans for the credit impaired or those with a poor or bad credit history. You will almost certainly have to approach the home loan application process armed with more information so using a good mortgage broker is the best way to help you navigate through your different options.
More information and home loan help
For more information on how and where to find a better home loan deal from an extensive panel of Australian banks and secure mortgage lenders, or to speak to your local area mortgage expert, contact us on 13 LOAN (direct +61 2 9249 3739)
