CLEANING UP YOUR CREDIT FILE
Have you ever taken out a personal loan, owned a credit card or purchased an item on store credit? If you answered yes to any of these questions, chances are you have a credit report and credit history stored on file.
The big question is, how does your credit file represent you as a potential borrower?
It will affect your chances of getting a good interest rate on your home loan, or even if you can get a mortgage at all.
What is a credit file?
Your credit file details your financial history and outlines your previous dealings with credit providers such as credit card companies, as well as listing late payments you may have made. It will contain information regarding all credit applications you have made in the past five years, any existing loans or outstanding debts, and default notices where payment has not been made in over 60 days. It will also contain fraud convictions and bankruptcy orders.
Why it matters
When it comes to taking out a home loan, lenders will assess your credit file to determine your eligibility as a borrower. If you’ve ever missed a credit card repayment or let a phone bill slip, these minor instances may be recorded on your credit file. Although they may appear harmless, a credit file with multiple missed payments can say a lot about your credit habits and potentially limit the amount a lender is willing to offer you. It’s therefore essential to keep your credit file as squeaky clean as possible to maximise your chances of being approved for the loan you need. You can do this by making regular repayments on any loans and ensuring all bills – even the smallest ones – are paid on time.