Last week, sitting at my hairdressers, we got to talking about her dreams to buy a new home. She wanted the home to be on the right side of the Central Coast and she talked about her plans to have a big family. She was dying to move out of the tiny space she and her boyfriend shared at her in-law’s place. She wanted to be free and independent, and kick start her life with her soul mate.
Amongst all the excitement about the types of homes she liked and which mortgage broker to choose, I asked her a simple question: had she checked her credit files to see that everything was in order, ahead of applying for a loan?
Potential problems on her credit file were that she had too many recent enquiry listings, which are placed on your credit file every time you apply for credit or loans. This kind of loan shopping lowers your credit score, and if she’d also applied for “high risk” finance, like Nimble or other fast cash loans, or even used Zippay to buy something, this would further lower her credit score. She confessed her boyfriend had recently used Zippay to buy tyres for his car which she said was silly because he could afford to pay for them outright. She was dismayed to learn that this type of purchase would lower his credit score and raise a red flag with potential lenders.
I checked in with her if she’d had had any overdue bills in the past 5 years, things like overdue phone or electricity accounts or any overdue credit card debt or other debt. A surprising number of young people sign up to electricity contracts for share houses, then move out and forget they are the ones responsible for the final account, not their housemates. The downside of this scenario is that this can lead to an overdue account or default listing on their credit file which will stay there, whether paid or unpaid, for 5 years. This realisation can be devastating for people when they want to be approved for a home loan, that a simple mistake won’t let them realise their dreams.
After my foils were out and the haircut began, my hairdresser asked me to order their credit files and assess them to look for potential problems. Thankfully, as expected, their files were almost perfect. The Zippay enquiry appeared on her boyfriend’s credit file, and we began to work to erase it. He also decided to pay out his Zippay account and close it as he didn’t want this red flag coming up again in the future. My hairdressers credit file was also perfect except for one little thing – that she was listed as male instead of a female! So, we have set to work to fix that for her. It won’t be long before they can apply for their home loan with more confidence, knowing that their credit files are in good order.
To check your credit score, you can order all of your credit files for free by following these links:
1. Equifax: https://www.mycreditfile.com.au/products/equifax-credit-report-formerly-known-my-credit-file
2. Illion: https://www.creditcheck.illion.com.au/
3. Experian: https://www.experian.com.au/order-credit-report
The Equifax Australian Credit Scorecard for 2023 https://www.equifax.com.au/knowledge-hub/news-and-media/aussie-credit-scores-kept-afloat-covid-savings-despite-economic-challenges notes that the average Australian Equifax credit score is 855 out of a possible 1200.
The good news is that credit file assessment and repair can put you into a position where you may be approved for a home loan sooner rather than later and without waiting the up to 5 years for the black marks to drop off your credit files.
You can find out more about addressing the marks on your credit score by contacting Solve My Debt Now on 1300 070 672 and talking to our specialist team.
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Book your FREE Consultation now and talk to one of our qualified SMDN Advocates to see if we can help. It just may be the call that helps you clear your credit file of black marks!