If you’re thinking of getting a loan or a credit card, then you’re going to need to take a look at your credit file. Your credit file is your credit report/rating that shows your financial history. Lenders and banks heavily rely on credit scores to determine the borrower’s behavior when paying off debts.

Hence, it’s vital to have a suitable credit file. The good news is that the new Australian credit reporting system, the Comprehensive Credit Reporting (CCR), reflects positive and negative financial behaviors, which is beneficial for lenders and borrowers.

Still, knowing the things that can impact your credit file will help you be more aware of what to improve on. 

Multiple Credit Applications

All the loan applications that you send to banks are recorded. Too many credit applications are deemed negative by some lenders. Borrowers tend to commit the mistake of submitting applications to as many lenders as possible because they think that this is a more efficient way to maximize their time and efforts. However, it’s best to research lenders first and pick the most appropriate ones to submit your application to. A mortgage broker who focuses on bad credit loans will be able to help you review your options without having to apply and impact your credit file.

Late Payments

A debt of at least $150 that is over 60 days late will reflect on your credit file. Overdue accounts remain in your data for up to five years. This can affect your overall credit rating. To avoid this, always make a point to pay on time. 

Inaccuracies on Credit Report

It’s possible to find errors in your credit file such as misspelled name, duplicate debt, etc. Fixing it later than sooner will affect your credit score and can impact future loan applications. That’s why it’s essential to regularly check your credit file and report any inaccuracies to a privacy commissioner. 

Failure to Update Credit File

If you’ve moved houses or changed jobs, your credit file must be updated accordingly. Failure to update your credit file can have an adverse effect on your credit score. To avoid this, check your credit file at least once a year to ensure that it’s updated. 

Canceling a Credit Card

If you have been paying off regularly a credit card and you decide to cancel it, you might be surprised that this could have an impact on your credit score. One of the ways to build a good credit score is through your credit card history and if you’ve been paying it off regularly, it’s best to keep it to help your credit rating, which would be helpful if you plan to apply for a loan in the future.

These are some of the things that impact your credit file. Knowing these things will help you be more mindful of your credit score rating that will lead you to better opportunities to improve your credit score. Whether or not you’re applying for a loan, a good credit score is essential.

So make sure to maintain a good credit history. It will definitely pay off in the end. You’ll never know when you’ll need financial help; hence it’s always best to be prepared. 

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