What is a credit report and how does it affect your loan application?
A credit report is a snapshot of your credit history and includes:
- Your personal details
- How much credit you have and what types such as credit cards or home loans
- Have you made all of your repayments?
- Each time you have completed a credit application (whether it has been successful or not)
- Any serious credit infringements or cases of fraud
If you want to get fancy, it’s called Comprehensive Credit Reporting and it’s only been around for four years, but is being used now more than ever by the big banks to find out just how good a loan applicant is with money.
In the past, not paying an electricity bill or moving address frequently was no biggie. But this now signals to a bank that giving you a loan could be risky business and your credit score is seen as being a poor one.
So how do you keep your record squeaky clean?
- Pay your bills on time.
- Don’t ignore the multiple warnings for late payments.
- Stay away from lots of small loans that make you look like you are bad with money.
- Don’t apply for too many home loans or credit cards in a short period of time. This is seen as a red flag to the banks.
Of course if you are worried about your credit score and think you may run into a few issues when applying for a loan, speak to me and I can look at your situation and from our panel of over 20 banks and lenders, see what options are available to you.