What is a credit file/ report?
A credit report is a statement that summaries your personal credit history and provides a snapshot of your current credit accounts.
Lenders use your credit report as part of their decision to approve (or decline) your application for finance.
What kind of information does my credit report contain?
Your credit file shows all credit accounts held in your name over the last few years (for example – credit cards, later-payment accounts, personal loans, home loans). It also provides details of the credit facilities you currently have.
It will show the lender, the credit amount and the date the account was opened (and closed) and also report any issues you’ve had making loan repayments on time.
How accurate is the data on my credit report?
In the majority of cases, the information presented on your credit file will be accurate and up-to-date (within a few months, that is). This is because lenders/credit providers submit information to credit file agencies regularly, but there can be a lag in terms of when this information appears on your individual credit report.
For example, say you sold a property two months ago and upon this sale, the related home loan was paid off and closed. Your home loan (which has since been closed), may continue to show as a credit facility on your credit file at least for a few months post settlement. If you’ve closed a credit account just before applying for finance, often a lender will request a closure letter to confirm this, because the liability will still appear on your credit file.
What can I do if my credit report is inaccurate?
If your credit report is inaccurate, you will want to correct it. The first step would be to contact the credit agency and/or institution the inaccurate credit account belongs to, so you can take steps to get the information updated.
Will a lender approve my loan if I have blemishes on my credit file?
Lenders take the information on a credit file very seriously, as they consider it to be overview of how you manage credit and is indicative of how you will potentially manage the repayments on a new loan.
It really depends on what the blemish is, as to whether it will stop you from securing finance.
If you’ve had a late payment on your credit card, a lender will want an explanation as to why this has happened. However, if you have a history of regularly making late payments to your credit card, this may be enough for a lender to decline your application.
Loan defaults are another matter altogether and can often stop an application in it’s tracks. There may be an avenue to explore options with a non-confirming lender, although these lenders typically charge much higher interest rates and application fees.
How can I access a copy of my credit report?
Credit reporting bodies have to provide you with free access to your consumer credit report once every 3 months. You’re also entitled to a free copy if you’ve been refused credit within the past 90 days.
If you want a copy of your credit report for your own information, you can request it through a credit agency like Equifax.
