Changes to the credit rating system
We have many clients express concerns about their credit rating. Most of them are uncertain about the actual content on their credit rating. The reality is that not everything has an impact on your credit rating.
On the 12th March 2014, the credit checks system is about to change. This could have a huge impact on loan approvals. The current system is much less comprehensive. A credit file is mostly concerned with the number of credit enquiries someone has made and whether or not they have any defaults.
The changes that are forthcoming will go a step further. Every time someone misses a payment by more than 5 days, their credit file is given a black mark and their credit rating gets worse.
On the plus side, the new system will now capture and recognise those who pay their bills on time. Loan applicants will get green lights for positive factors such as how often they have made payments on time.
In summary, here are some of the specifics that banks will know for the new credit checks:
• If a repayment of over $150 is more than 60 days late, it will be listed as a default.
• The limit on the credit cards for which you have applied.
• The type of card for which you have applied.
• The date you opened a credit account, the type of account, and when it was closed.
• If, because of a default, someone has entered into a new varied arrangement for repayments.
This information is captured for the previous 2 years.
Here are some things that can be done to keep a credit check in good standing:
§ Set up automatic payments on your credit card and loans so they are paid on time
§ Close down any credit facilities you don’t need
§ Check your personal credit file online http://www.mycreditfile.com.au/
§ Pay a debt more than five days after the due date
§ Acquire credit cards and store leases when you don’t need them
§ Fail to contact the lender to renegotiate your repayment terms
Remember, you are responsible for your credit rating so be sure to know your file and keep on top of managing it.