How will my credit history impact my loan application?
We can tell you how your credit history will impact your loan options and talk you through the steps needed to secure the right loan for your needs.
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)
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.