Getting a loan with a credit history

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A credit file is kept for any person who has borrowed money for a credit card, a mortgage or a car over the past seven years.

Your credit file is updated every time you apply for new credit. This credit history impacts on whether or not a credit provider will approve your loan. How much importance is placed on it will depend on the lender.

What is on a credit file?

Your credit file contains information about you and your credit activity over the past seven years, including:

  • Personal details like your name, addresses, date of birth, drivers licence number and employers
  • Credit applications and enquiries you’ve made during the past five years
  • Records of some current credit accounts
  • Overdue accounts (defaults) which have been listed against your name and whether the default amount has been paid or not
  • Bankruptcy information
  • Default judgements
  • Public record information

What is included in public record information?

  • Judgement and writ of summons information from courts around Australia
  • Bankruptcy/Part X/Part IX information from the Insolvency and Trustee Service Australia (ITSA) in each state
  • Directorship information from the Australian Securities and Investment Commission (ASIC)
  • Proprietorships

How can I get a copy of my credit file?

If you’re applying for a home or business loan, it’s a good idea to get a copy of your credit file before you apply for a loan. You can apply for your credit profile online at www.mycreditfile.com.au for a small cost. Getting a copy of your credit information file will assist you in understanding, assessing and managing your own credit-worthiness.

Tips for maintaining credit-worthiness

  • Pay bills on time. An overdue account is usually a debt that has been owing for a minimum of 60 days. Unpaid accounts will remain on the database for seven years.
  • If there’s a problem meeting your credit commitments call your providers to alert them
  • Review your credit file to make sure there are no errors in the information and to see if there are any overdue accounts that have been missed
  • Monitor your credit file to ensure someone is not fraudulently using your identity
  • Limit credit applications to necessary situations only. Each new application is recorded on your credit file and too many applications, even for loan pre-approval, can be an issue for some lenders

What do I do if I have past credit issues or a bad credit history?

In Australia, even if you have a negative credit history, you might still be able to secure a competitive home loan. Make sure you’re aware of all your options. It’s a good idea to:

  • Inform your mortgage broker and lender of any problems in your credit history. Your mortgage broker will show you loan products that take your situation into account.
  • Explain each problem, why it occurred and how you rectified it.
  • Negative responses to credit applications do not necessarily mean your credit file is flawed. Credit providers each have their own lending criteria, so seek an explanation.
  • Investigate securing your loan through a non-conforming lender. They consider applications from people with past credit issues. However, you will need to prove you are now in a position to support the loan.

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