Your credit rating is a score calculated by the lender based on your credit file, the amount you want to borrow, existing borrowings and the security you can put up. Your credit file is reviewed when applying for a homeowner loan, mortgage, and car finance and sometimes when applying for a job. Your credit rating can be considered your trustworthiness to repay the amount borrowed. It’s important that you know what your credit rating is and how to maintain it.
Good, Bad or Wrong?
A bad credit rating can be repaired and is not something to worry about long-term. However, if you are looking for a loan quickly, you will find fewer lending institutions willing to lend you money. Lenders that are willing to consider a consumer with an adverse credit history will charge greater interest rates.
A good credit rating will attract more loan companies offering larger amounts of money, more competitive interest rates and more flexible payment agreements.
Research states that around 80% of the credit files maintained by credit agencies contain outdated or incorrect information.
How do I Access my Credit File?
The first step to maintaining a healthy credit rating is to request your credit file from Equifax, Experian and Trans Union. You are entitled to one free report per year, however, you should request a report from all three because the files that they hold maybe different.
Review your Credit File:
Following is some of the most common errors and problems to look for when reviewing your credit file. If you notice any inaccuracies contact the credit agencies immediately. Keep copies of any correspondence and log all phone calls. Send copies of any documentation that supports you claim – do not send originals.
- Basic Inaccuracies: Look for payments or accounts that are incorrectly recorded as late or unpaid. This can happen through no fault of your own when checks are late arriving or go missing in the post.
- Identity Theft: This is a major concern of today and is one of the fastest growing crimes worldwide. Look for accounts that have been opened in your name without your knowledge or consent.
- Credit File Requests: When you apply for a loan the lender will request your credit file. Each request is logged; carefully check for any fraudulent activates that could indicate an attempt at identity theft. Too many requests can be seen as detrimental by some lenders making it difficult to secure a loan.
- Credit Fraud – Unauthorized Charges: Unauthorized use of your Credit Cards to purchase goods or services may go unnoticed, particularly if the fraud is through an account that you do not use regularly.
Manage your credit worthiness:
Credit agencies do not check the correctness of any information that is passed to them from your creditors; it is your responsibility to ensure that your credit file is correctly maintained. Requesting your credit report once per year regardless of wither there is a problem obtaining credit or not is the best way to ensure the credit files held with the agencies are accurate.