Understanding your credit file and what information can be captured in it is a crucial part of applying for finance. The details captured in this report are used by a lender as part of your overall assessment in obtaining approval for a loan.
What is a Credit File?
A credit file, sometimes referred to as a credit report or credit bureau check, is information captured by a credit reporting agency that can capture and provide the following information:
- Name, current address, date of birth and driver’s licence number (if applicable), which is primarily used to verify your identity
- Residential address history
- Employment history
Consumer Credit Information
- Credit applications that have been made in the past 5 years
- Overdue accounts including payment defaults. Normally a payment default is an account of $100 or more that is 60 days or more overdue. This can include utility and phone bill payments. Even if this is subsequently paid it can remain on your file for 5 years. Clear outs are overdue accounts where a credit provider cannot locate you. These can be listed immediately and remain on your credit file for 7 years.
Commercial Credit Information
- Credit enquiries relating to applications for credit for commercial purposes
- Details of any overdue commercial credit accounts
Public Record Information
- Court judgements and writs
- Directorship and/or proprietorship details
- Bankruptcy information
Some credit agencies provide a credit scoring or rating system relating to the information that has been captured on you. Some lenders use these scores as part of their credit assessment process.
Repayment History (New)
Repayment history information can now be collected for your credit report. From March 2014 if you fail to make a repayment by the due date this can be captured on your credit file. In fact, information about your repayment history can be collected from December 2012. Information captured can include the date your credit payments were due, whether or not you made the payments by the due date and the dates on which you made any missed payments.
Impact on Loan Assessment
Any adverse listings on your credit file can have a negative result on your loan approval. Some lenders and mortgage insurers (subject to the individual assessment) may consider one or two paid defaults up to certain dollar value. Also, whether it’s a financial or non-financial paid default is considered. Also some lenders will consider lending at a lower loan to value ratio (usually 80% or less).
There are lenders (also known as non-conforming lenders) that will consider paid defaults on a credit report. The loans they offer will attract higher interest rates and lower loan to value ratios, again 80% or less.
So depending on how severe your credit report is there may be some options still available to you but in most cases this results in requiring a larger deposit and paying a higher interest rate.
If you have any issues with your credit file talk to Keypoint about your options.
Accessing your Credit File
You have the right to know what is on your credit file and try and correct any errors that may be listed. Reporting agencies do charge to provide immediate access to your file but are also required to provide your file free of charge. This usually takes a few more days.
The following are credit reporting agencies you can contact to get a copy of your credit file. Most lenders use Veda but you could have a report with any of these agencies:
Dun and Bradstreet
Tasmanian Collection Service (if you live in Tasmania)