stratton Newsletter #3 2004
Standard defaults are listed on a credit report for five years. After five years the listing is removed, but only after being paid in full. A bankruptcy stays on file for seven years.
Even the number of loan applications you have made could influence the decision. If there are too many applications in a short period of time, this can go against a person in obtaining a loan.
The type of finance company you have applied to will also affect your application.
Almost all credit rating systems are sensitive to the time that you have been in your home and job. You will almost certainly get a much better credit rating if you apply for credit before you leave one job to start another, or before you move house.
Most credit rating systems are also very sensitive to anniversaries. For example, it is better to be just over one year than just under one year in a job. If you are coming up to an anniversary at either your job or at your home, then it may be better to delay your credit application until just after an anniversary has occurred.
Always complete all the details you can on an application. Unanswered questions often trigger low credit ratings. It is important to answer every question. Questions you may not think are important may actually have a big impact on your credit rating.
It is always best to fill in as many fields as you can honestly, because the lenders do confirm the information you provide in the application form.
Many defaults are as a result of a disputed invoice and are often for less than $500. Don't take the moral high ground over minor claims by just not paying when you have a dispute with a supplier (e.g. phone or power company). Even if you are in the right and eventually win the case the default will remain against your name and you will have to prove its been paid.
We recommend that you pay the bill first and then resolve the dispute in the small claims court.
At stratton, the type of finance we arrange is secured finance. This means that your payment history is accessible to other financiers for a credit reference, which will demonstrate that you are a person that pays your commitments on time.
This could make the difference as to whether or not we are able to get you a higher residual, or not have to contribute any deposit, or be able to include insurance in the finance. It also gives the financier 'peace of mind' so they view the application in the best possible light.
As parents we can help our children with their credit rating. It is similar to insurance, in that it is best for them to start earning an insurance rating as soon as possible by always being listed on your insurance policy as soon as they get their licence.
With credit rating, if it is a first time your child needs to apply for credit, it may be necessary for you to be guarantor to assist with establishing a credit history for them.
This should mean that for their second credit application, as long as the account has been conducted properly, your child would usually be able to apply in their own right.
Understanding personal credit reports is important. If, like most people, you are looking to borrow money (credit card, mortgage, car) consider finding out what is on your credit report.
The main credit rating agency in Australia, Baycorp Advantage (formally CRAA), will have your file on record. Obtaining your personal credit record is free, although if you want it within 24 hours it will cost about $20.Protecting your identity
Be careful with your personal details, drivers licence and passport etc, if these fall into the wrong hands. Someone can re-create your personal profile and take credit out in your name.
If you are concerned you can register an alert with Baycorp. For a small fee they will e-mail you whenever your file is accessed.
If you have not applied for credit and you receive an alert, then someone is checking your history without your authority. This is an offence, and should be reported.