Understanding Your Credit File

If you want to buy a home, get an auto loan, or even apply for a credit card, the potential lender is going to examine your credit file. To put yourself in the best position to get favourable terms for your loan, you should understand what’s in your credit file.

What is a Credit File?

A credit file is a report that shows personal information about you, such as your name, address, date of birth, driver’s license, employer information and so on. It also includes information about the loans you have, including credit cards, auto loans, and home loans. If you have applied for a loan, the enquiry will appear in your credit file, whether you were actually granted the loan or not. Your file will also include information on when each account was opened and closed, and details on any accounts you did not pay on time. Your credit file will also show the total amount of credit that is available to you. This is the total of credit limits on credit cards, equity lines, and any other loans. A credit file is sometimes referred to as a Veda file, as Veda is the name of the company that used to provide most credit files in Australia. Veda has been acquired by Equifax, so your file may now be referred to as your Equifax file.

What Affects Your Credit File?

Your credit file will be affected by the amount of credit that is available to you, the amount of debt that you have, and your payment history. It may also be affected by court judgments, bankruptcy, and any debt agreements you have entered into, such as those that settle a debt for less than the full amount owed.

How Can You Improve Your Credit Score?

The first thing to do if you want to improve your credit score is to always pay your bills on time. Make sure you allow plenty of time for your payment to arrive and be credited to your account, as some companies will report a payment that is late by as little as one day. Do not use all the credit that is available to you. If you have credit cards that carry balances up to the credit limit, pay them down so there is at least some room on them.

Managing Your Credit File

Request a copy of your credit file from Equifax once a year. Examine it carefully to make sure there are no errors. If you find an error, contact the creditor to find out how to have it corrected.

How Long Information Stays on Your Credit File

If you have negative information on your credit file, it can stay there for five to seven years, depending on the type of information it is. Repayment history stays on your file for two years; credit enquiries, overdue accounts, and court judgments will remain for five years; and serious credit infringements can remain for seven years. Since understanding and managing your credit file will help you get the best possible terms on loans in the future, it’s worth taking the time to review it regularly and correct any errors.


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