Ever had someone ask you for $50 and promise to pay you back within a week? And if they didn’t, would you be inclined to lend them $50 again? Well, that’s how a lender looks at you, the borrower.
It’s why most lenders take your credit report into consideration when assessing your suitability for a loan. Your credit report paints a picture of your life as a responsible bill payer and borrower. Under the Comprehensive Credit Reporting (CCR) rule introduced in 2019, your credit report is more important than ever.
What is a credit report and why is it important?
Credit bureaus compile credit reports based on feedback about your credit behaviour from banks and other credit providers. Your credit report contains a credit rating between zero and 1200, which is an overall measure of your creditworthiness. If you’re applying for a loan, credit card, electricity or mobile phone contract, chances are a credit check will be undertaken.
In 2019, under the introduction of CCR, it’s compulsory for banks to share both negative and positive details about your credit behaviour with other lenders.
How to access your credit report
Simply request a copy from a credit reporting body like Equifax, Dun and Bradstreet, Experian or the Tasmanian Collection Service. You can access your report for free once a year and it should arrive within 10 days.
Tips for keeping your credit report healthy
- Regularly review your credit report
Make a habit of checking your credit report at least once a year. Carefully comb through the details and check for any errors. Make sure your personal identification information and financial details are accurate. Be sure to check that any negative information such as bankruptcies have been removed from your credit report after the required amount of time.
Hot tip: Some credit bureaus offer subscription services that alert you to changes in your credit report. This could come in handy for protecting yourself against identity theft.
2. Report any errors
If you notice something’s amiss, it’s important to address the issue immediately. Contact the credit provider (bank, utility company or telco, for example) and ask that the matter be investigated. Also, file a dispute with the credit reporting agency about the error. If you are told the discrepancy will be rectified, be sure to follow up to make sure it’s been fixed.
3. Pay your bills on time
If you have a track record of late payments, credit providers may think you are under financial stress. Remember to pay your bills and credit cards by the due date. Setting up autopay or direct debit is a good way to stay on track. By paying bills on time, you’ll position yourself as a responsible borrower who is reliable when it comes to money matters.
4. Go easy on credit applications
Applying for multiple credit cards, loans or other forms of credit in a short timeframe can signal a red flag for future credit providers. Only apply for credit when it’s necessary, you’ve chosen your preferred provider and you are confident of being approved.
Like to know more?
If you’re interested to learn more about your credit report and how it may affect you as a borrower, please reach out. We’re here to help and would be happy to answer any questions.