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What does your credit file say about you?

Just how you manage your debt is no secret thanks to credit history files, so it pays to keep your file in shipshape order if you want success in buying property.

Have you ever borrowed money for a car, owned a credit card, or forgot to pay your phone bill on time? Were you aware that all of this is kept in a credit file accessible to any financial institution – with your consent?

If entering the property market is your aspiration, then it pays to understand how your credit history is recorded and just how it can influence your home loan eligibility.

Credit files and home loans

Defaulting on your loan repayments or phone bill are examples of items that may be recorded on your credit file. Such items can remain on your credit file for a five year period. Some, such as bankruptcy orders, can remain for 7 years.

Ultimately, these items on your credit file can affect the loan amount you may be eligible to apply for. In some circumstances, it can result in the denial of your loan application.

To what extent your credit file will influence your home loan application will depend on the lender. Each lender applies their own credit criteria when it comes to assessing applications.

Some lenders, for example, will use ‘credit scores’ as part of their credit risk assessment process in conjunction with their lending criteria. Because of the difference in credit assessments, one lender may approve your application, while another may not.For this reason it is essential to keep your credit file as squeaky clean as possible to maximise your chances of being approved for your loan.

You can ensure this by upholding regular repayments on loans and meeting all bill payments on time. Credit reports are held by a credit reporting agency. You have the right to access your credit file of the reporting agency (Veda Advantage for personal purposes). You can also request incorrect information to be amended. We recommend you contact the credit reporting agency before embarking on any property purchase to prepare yourself for any loan hurdles you may face.

What is a credit file?

A credit file is essentially a record of information concerning your dealings with credit providers. It is often used by providers to ascertain your creditworthiness or reliability to pay back a loan. The record is held by a credit reporting agency.

The information usually covered includes records of credit applications made by you in the past five years, existing loans and debts, default notices where payment hasn’t been madein over 60 days, as well as fraud convictions andbankruptcy orders.

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