Your credit file is one of those things that you often neglect until you need it.

Heck, many people don’t even know they have a credit file, let alone the implications if they should end up with a default listing on their credit file. We explore the importance of knowing what people say about you on your credit file, how to check your credit rating, and why the end of financial year is a great time to make sure your credit file health is a-o-k.

By Graham Doessel, Founder and CEO of MyCRA Lawyers & Credit Rating Repairs and www.fixmybadcredit.com.au.

As the saying goes….there are two certainties in this world – death and taxes. But there is another certainty in Australia. If you have ever taken out or applied for credit, you will have a ‘credit file’ in your name. What does your credit file say about you?

Your credit file contains a history of your credit applications, default listings and other information from the last (up to) 7 years, and is collated by the major credit reporting agencies if you have been credit-active in the past 5 to 7 years.  If you’ve applied for finance, or an account for services you are considered credit active and Creditors will have created or added to an existing file with one or more of the credit reporting bodies. Account types include mobile phone plans, accounts with utility companies, credit cards and finance or loans of any kind.

Why should I know what’s on my credit file?

Every creditor collects information about your credit activity and that information is supplied to one or more of the credit reporting agencies in Australia when required. When a lender is considering your credit application they will check your credit file to assess your suitability to service a loan or credit account.

Your credit file contains information about credit and repayment of credit history, including any applications for credit and various details relating to your repayment history, for instance mortgages, personal loans and credit cards – and the way you conducted those accounts. It also contains any overdue credit accounts – these may be reported as a ‘payment default’, ‘clear-out’, an overdue account, late payment or in some cases may have gone all the way to a court Writ or court Judgment.

Whilst there are legislative processes which must be followed when Creditors enter items on your credit file, it is up to us as the consumer to check that this has been done accurately. You may not know about a listing on your credit file, particularly if you have moved. In addition to this, mistakes can and do happen – even if you believe you have always made payments on time.

A default or Clear-out will generally see you refused most types of mainstream credit for the term of the listing which can be 5-7 years – so it is important to know you have the all clear on your credit file, and if you don’t, you have time to fix any issues prior to applying for credit of any kind.

How do I check my credit rating?

If you are like many Australians you may be unaware of how the system works, and what your rights are in credit reporting so you probably haven’t checked your credit file before now.

You can apply for a copy of your credit file for free every year from Australia’s credit reporting agencies, Equifax (Formerly Veda Advantage), Dun & Bradstreet, and Tasmanian Collection Services (if in Tasmania). A copy will be sent within 10 working days. Or you can pay a little extra for an urgent report.

If your report comes back with errors, or you feel a listing is unjust or shouldn’t be there, you do have the right to have incorrect information rectified.

Why is the end of financial year the best time to check my credit rating?

End of financial year is a great time to order a copy of your credit file because after you have sat down to do your tax each year your records tend to be in order. This way, if there are any items you wish to cross-check on your credit file, you will have all the necessary information at your fingertips.

What happens if my credit rating is not correct?

Most people find it really hard to correct their credit listing themselves –especially if it’s complicated. For one, the Creditor has to comply with a whole heap of legislation that crosses different codes, and if you don’t know legally where they may have made errors – it’s pretty hard to persuade them they have done the wrong thing. Secondly, negotiating anything on your own behalf can be tricky.

You may have a better chance of bad credit removal if you hire the services of a credit repair lawyer. Most of them will look after getting a free copy of your credit file for you, order your documents from the Creditor as well as directly negotiate with them to remove your bad credit, based on the relevant legislation applicable to your case.

To find out more about repairing bad credit, contact MyCRA Lawyers & Credit Rating Repairs on 1300 667 218 or visit the main website www.mycralawyers.com.au.

Image: nuchylee/ www.FreeDigitalPhotos.net