Real Money Advice for Divorce

A three stage money guide to help you negotiate the divorce process and create a secure financial future for yourself and your kids.

30 Day Challenge

How to turn your life around in 30 days and save  $30 000 in the process.

A breakthrough in money management!

Real Money Advice for Families

Move your finances from red to black in four simple steps and secure your family's financial future.

Real Money Advice for Kids

A guide designed to help parents  teach their kids  the skills to become successful, confident and financially responsible.

Understanding your credit rating

Michelle Hudson

I have often found that there is some misunderstanding about what a good credit rating is. Most people often don’t even think about their credit rating until they try to borrow money, and this can often be too late. Therefore I would recommend that you get to know your credit rating.

If you go to www.mycreditfile.com.au you can order your file from Veda Advantage. You can order your file for free if you are prepared to wait ten days for it, or for a fee if you want it sooner. Your credit file shows your credit history for the last seven years, and is the first place that a credit provider looks when they are assessing whether you are good credit risk. Even if you’re not interested in acquiring finance, it’s also important to check your credit file due to identity theft.

If you are planning to borrow in the future keep your repayments up to date on your credit cards, mobile phones and so forth, even if you are disputing the bill. If a default is recorded against your name, a credit provider may decline your loan. With this in mind you are better off declaring if you are aware of any defaults whenever you make an application and give the lender a full explanation about them. If a default is listed, it remains of your file for five years as a warning to other credit providers, regardless of whether you paid the amount owing at a later stage or not.

Telephone companies are the most common defaults listed and these are often due to a dispute. When you are having a dispute with a company about a bill and they admit fault, it is really important to get the person’s name and also to ask for something in writing. It sounds obvious however I have come across clients who have had to wear a default listing as they can’t prove the conversation that they have had with the company when they have admitted that they are at fault.

Having said all of this it’s important to note that when I talk about credit defaults I am not talking about late repayments on your loan, credit card or bills. A credit default goes beyond just being a bit late with a payment. You should generally be aware when you have a credit default listed on your file, as the company will need to have started legal action and notified you by mail. Generally this will happen after you have missed two to three payments, but individual circumstances can vary.

If you have had a change in circumstances and are unable to keep up with your required payments, go to your finance broker or the credit provider to discuss your options, rather than waiting until they take legal action against you and having to live with a notation on your credit file that could impact you greatly in the years to come.

If you liked this article you might also be interested in these articles about money management and protecting your credit:

How to build a 'AAA' credit rating

Author's Biography

Michelle Hudson is a Finance Broker and founder of The Loan Lady.

Michelle has been in the banking and finance industry for over 30 years assisting people to finance their dreams from motor vehicle purchases through to property and business purchases.

‘I help you find the loans that the banks don’t advertise.’

Email Michelle on michelle@theloanlady.com.au or look at the website www.theloanlady.com.au