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Why you should know your credit rating
Knowing your Credit Rating will maximise your chances of getting
a loan.
By knowing how to TIME your application you can ensure that you
will get the BEST POSSIBLE Credit Rating which will greatly
increase your chances of getting a loan.
You can do things that can ERODE your Credit Rating, without
even knowing it!
Knowing what NOT TO DO can ensure that even if you been declined
in the past, future applications may be successful.
Understanding 'What To Do' if you do have a Credit Problem with
a Credit Bureau or a lender is important. You can, at the very
least, manage your situation without further damaging your
Credit Rating
If you have a very HIGH Credit Rating you should be able to
negotiate high initial credit limits or lower interest rates for
yourself.
What to do if you have a default
If you have a DEFAULT NOTICE, you need to find out why!
You can get a DEFAULT NOTICE on your file if a lender shows that
you have an unpaid bill.
This could be a mobile phone bill, a credit card bill, even a
utility charge.
Sometimes you may not even know about it until you have been
declined and asked 'Why?'.
If this has happened to you, it will very difficult for you to
get a good credit rating until the DEFAULT record is removed
from your Credit History File at the Credit Bureau.
You should immediately get a copy of your credit file from the
Credit Bureau and ensure the information in it is correct!
If there has been a mistake or misunderstanding, then you should
contact the company that put the record on your file and dispute
it!. The only way to have the default removed is to dispute the
validity of the record and get the company to remove it from
your credit file.
It will be difficult to get a good Credit Rating with a default
record on your file.
You have to either get the record removed by the lender, or wait
five years when, by law, the Credit Bureau is required to remove
it.
You need to know that Credit Bureau files are strictly personal
to the 'owner'. That is, they only relate to you - NOT to your
partner, or any other family member or friends etc.
A lender cannot decline your application for credit for the
reason that your partner has a default notice on their credit
file (unless they applied with you as a co-applicant and also
signed the application form or acted as a guarantor).
What to do if you have been declined credit
If you are declined, try to find out why.
It can be almost impossible to find out 'Why' you were declined
a loan!.
Most times lenders will not tell why you were declined; HOWEVER,
they do have to tell you if it is because of information in your
credit history file stored at the Credit Bureau.
You may have been declined because a company has lodged a
DEFAULT NOTICE on your credit history file at the Credit Bureau.
Sometimes you may be declined for reasons not to do with your
credit rating or your credit history file. In this case, for
example, if you do not meet certain lending policies (eg you may
be under 18, over 65, unemployed), or you may fit other
characteristics that lenders sometimes automatically decline or
refer for manual decision-making.
If this occurs, then going to other lenders may be a good
strategy; just check first to make sure that they have different
policy rules.
How shopping around can reduce your rating
Do not make too
many applications
In this country there is an organisation called a Credit Bureau
which records most times you apply for credit. They are able to
record your applications for credit because when you sign an
application form there is, in the small-print, an authorisation
permitting the lender to access your credit history file at the
Credit Bureau.
The Credit Bureau can only store certain information about you
due to the Privacy Laws, however it does keep track of how many
applications you have made, to whom and when.
If you make too many applications in a short time, this can
seriously reduce your credit rating and you will be less likely
to be accepted by other lenders.
Not many people understand this and it can cause them to
'shop-around' after they have been declined. All this does is
further erode your credit rating.
If you get a Credit Rating report you will be able to see, and
understand, the impact of shopping around. In this way you can
re-apply for credit when you know you may have a better chance
of being accepted.
Timing your application can have a large impact
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.
Timing is everything!
By getting a Credit Rating report you will be able to understand
and manage the impact of timing on your Credit Rating. You can
then plan your application to give you a much better chance of
getting a loan. Anniversary's can have a BIG impact on your
Credit Rating
Anniversary's can have a big impact on your Credit Rating
Most Credit Rating systems are very sensitive to anniversary's.
For example:
It is always 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. This
can help you get a better Credit Rating.
A Credit Rating report will help you to understand the impact of
anniversaries and allow you to time your application, giving
give you a better chance of being accepted for a loan.
How to tackle a credit application form
Always complete all
the details you can on the application form.
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.
Ratings Explained
[ AAA ]
A "AAA" credit rating is the highest possible rating.
This is a premium status and should be reflected in the service
and benefits you can expect from major lenders and usually value
your custom highly. This rating places you in the lowest risk
category and you should be rewarded by lenders with access to
premium products and services. You should be granted credit by
almost all lenders you approach.
You should be able to negotiate favourable terms and conditions
that are tailored to your circumstances - including waiver of
fees and desired credit limits.
You are in a very strong position to demand the lowest possible
interest rates.
[ AA+ ]
A "AA+" credit rating places you in a very low risk category and
means you will be able to obtain credit from almost all lenders
you approach.
Major lenders will be keen to pursue a relationship with you and
may offer you their premium products and services.
You may be able to obtain very favourable terms when you apply
for credit, including possibly negotiating fees, interest rates
and other terms and conditions of credit.
[ AA ]
A "AA" credit rating is a very sound rating and places you in a
low risk category.
Most applications that you make for credit will be accepted by
most major lending institutions.
You should be able to obtain credit under favourable terms and
conditions and have access to some premium products. If your
need for credit is not immediate, it may be to your advantage to
delay your application until you can achieve an even higher
rating, which would further strengthen your negotiating
position.
[ A ]
A "A" credit rating is a very acceptable rating placing you in a
low risk category.
This rating means that you should be able to successfully obtain
credit from most major lending institutions and be offered
credit under standard or advertised terms and conditions.
If your need for credit is not immediate, it may be to your
advantage to delay your application until you can achieve an
even higher rating, which would strengthen your position.
[ BB ]
A "BB" credit rating places you in the medium to high lending
category for credit and you may be able to obtain credit from
traditional sources of credit on most of the time. However, on
occasion you may be declined credit.
This rating means you will be offered credit under standard or
advertised terms and conditions.
If your need for credit is not immediate, it may be to your
advantage to delay your application until you can achieve an
even higher rating, which would strengthen your position.
[ B ]
A "B" credit rating places you in the medium lending category
for credit and means some lenders will say "yes" to your
application, while others may sometimes decline.
In this category, it will be usual for you to be offered credit
under standard or advertised terms and conditions.
[ C ]
A "C" credit rating places you in a low rating category for
credit and may be difficult for you to obtain credit from
traditional sources at this time.
This rating means that your most likely source of credit is from
non-traditional sources who require security over assets and
charge very high interest rates.
If your need for credit is not immediate, it may be to your
advantage to delay your application until you can achieve a
higher rating, which may give you access to more attractive
terms and conditions.
[ D ]
A "D" credit rating places you in the lowest rating category for
credit and it is unlikely that you will be able to obtain credit
from traditional sources of finance at the current time.
This rating means that the most likely source of credit will be
from non-traditional sources that require security over assets
and charge high interest rates.
If the need for credit is not immediate, it may be advantageous
to delay any application until a higher rating can be achieved.
This may assist you accessing more attractive terms and
conditions.
How do I get a copy of my credit report?
Question: How do I
get a copy of my credit report?
Answer: You will need to contact Baycorp Advantage or Dun &
Bradstreet to obtain a copy of your credit report. You will be
asked to provide the following information to enable Baycorp
Advantage or Dun & Bradstreet to properly identify you:
You can contact
Baycorp Advantage or Dun & Bradstreet by telephone, in writing,
by fax or via the websites.
Contact details for
Baycorp Advantage is:
The Public Access Division
Baycorp Advantage
PO Box 964
North Sydney NSW 2059
Phone: (02) 9464 6000
Fax: (02) 9951 7880
URL:
http://www.baycorpadvantage.com.au/
Contact details for Dun & Bradstreet is:
Public Access Centre
Dun & Bradstreet Australia
PO Box 7405
St Kilda Road VIC 3004
Phone: 132333
URL: www.dnb.com.au
Credit reports are generally required to be given free of
charge.
People living in Tasmania should contact the Tasmanian
Collection Service at one of the following addresses:
Box 814H, Hobart 7001
Box 525F, Launceston 7250
Box 241, Davenport 7310
Box 355, Burnie 7320
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