What are the possible issues on a credit file?
Credit reporting agencies collect your financial and personal information and record it on your credit report. Lenders use this information when assessing your loan application to determine if you are a good risk to lend money to, and to confirm that you have disclosed all of your current commitments that affects your ability to repay the proposed loan. Some Lenders have streamlined and standardised their loan assessment policies which means they automatically decline loans if too many loan enquiries have been made on the report, or if there is evidence that you have had not paid debts on time in the past.
It is very important to ensure the information on your report is accurate so it does not affect your loan application. Credit Reporting Agencies will provide a free copy of your report on request, and having a copy when you apply for a loan will give you the same information the Lender will have, so you can address any potential issues on the report which will help your loan application to be approved.
What is a default?
A default is the credit report term for a payment that is more than 60 days overdue. It has been listed by the credit provider to alert other potential Lenders that you have been late with their payment. Even if there is a good reason why a default has been listed, some Lenders will automatically decline a loan application if you have a default listed, so it is important to ensure bills are paid when they are due, or you have contacted the credit provider so a payment arrangement can be made to avoid having a default recorded.
The default will remain on your report for 5 years, even if it has been paid. The status of the default will show it has been paid, but it still remains part of your credit history, and may still affect your loan application.
What can I do if my application was declined due to the report?
The first step is to get a copy of your report. The Lender is obliged to send you a copy on request if the report was the reason for the loan not being approved. Then you can check to see if the information on the report is accurate. We can assist you to work on improving your report to help with future applications. By having paperwork available to justify and explain why a payment was late may help a Lender understand your situation and help with your loan assessment. Ensuring the rest of your personal information on the application like employment and savings history and deposit / equity amount is strong may allow the Lender to overlook a default.
There are Lenders available who specialise in loans for people with adverse credit reports and we can show you the best options for your situation.
If my credit report is inaccurate, how can it be corrected?
Credit Reporting Agencies have a process to take if you believe the information on your report is not correct. To request a correction, you will need specific details of the information you are disputing, such dates, account numbers and amounts relating to the entry on the report, plus any documentation to support your claim. If your report has been corrected, the Agency will provide written notice to you, the credit provider, and any Lender who has requested a copy of your report in the past 3 months. If your report is not corrected, the Agency will write to advise it has not been corrected and the reasons why. If you are not satisfied, there are avenues available such as making a complaint to the Credit and Investments Ombudsman. A link can be found here https://www.cio.org.au/
Knowing how to manage your Credit Report is an important aspect of the loan process that we can assist with. Speak to us to see what we can do for you.