Possibly one of the most misunderstood pieces of personal information the vast majority of us have is our credit history. Usually not thought of until we go to apply for some form of finance, anyone who has ever applied for credit has a credit history.
So let’s start by clearing up a few popular misconceptions. How often have you heard it said, apply for credit and make the payments and this will help build a good credit history for you? Or even better, Pay Us and we can help clear up your bad credit history so you can get finance? Sorry but like most things that sound too good to be true they are just myths.
A credit history is simply a database. The most popular credit history database is managed in Australia by a company called Baycorp Advantage. This database is compiled by subscribers ranging from finance institutions to telephone providers cross referencing and recording details of each time you apply for credit.
At this time details such as current address, previous addresses, drivers license and employment details are all checked against your details currently held on file and updated.
All that is recorded in relation to your application is the name of the finance institution, type of credit applied for, and the amount of credit applied for.
It DOES NOT record if you proceed with your application or not, neither does it record if you make payments on time. However the credit provider can list you are overdue if you become 60 days or more in arrears on a credit account. This is commonly called a DEFAULT.
If you don’t rectify the default then the credit provider can then seek legal action through the courts to recover outstanding money. If successful this is also recorded on your credit history and called a JUDGEMENT.
If payment is made to rectify a default or judgement this is recorded on the credit history as a paid default or judgement. However the default or Judgement are not, I repeat not removed from your credit history until 5 years have elapsed from the date they were first placed on your credit history.
Two exceptions to the 5 year rule apply. Firstly, if you move address and don’t notify a credit provider and you incur a default, the credit provider can list your default as a default (Clear out) and is then listed on your history for 7 years. If you are declared bankrupt this is also kept on your history for 7 years.
If you find incorrect information on your credit history you can advise Baycorp Advantage and apply to have it corrected upon verification or proof of the error from yourself. Don’t expect this to be an easy or speedy task.
Lifeline Financial Services has one client who was incorrectly listed for a default for his mobile phone account (a paltry $142.00). This was only discovered when I applied to refinance his house. Due to the default we had to use a non conforming lender at a higher rate of interest to get the funds he required for business purposes. Our client fought the phone company for a year with the assistance of the Telecommunications Industry Ombudsman.
Just over a year from the discovery of the incorrect default, our client finally received a letter from the company unreservedly apologizing for the “erroneous and incorrect listing of a default on his credit file and that we will have it removed immediately”. Our client wrote asking for reimbursement of the additional $18,000 in extra loan repayments he was forced to make due to the error the company admitted to. We thought this was a fair and reasonable request…………….
Apparently the telephone company didn’t, as they advised our client in no uncertain terms that if he wished to pursue the matter they would fight it through the courts until he was out of money.
So what can you do to ensure you have the least possible accidental issues popping up on your credit files?
- Ensure that you give correct information including address, drivers license number and current employer.
- If you do get a default on your history pay it as soon as possible (within 24 hours is best).
- If you have a dispute and incur a default you have the right to have it noted on your file that this matter is disputed.
- Keep accurate records of all correspondence in relation to the matter, including photocopy’s and records of all phone conversations you have (who they are with and the date and time).
If you want to obtain a copy of your credit history you can request a free copy of you history from:
Baycorp Advantage Public AccessPO Box 964North Sydney NSW 2059
Or Fax: (02) 9951 7880
To obtain your file you will need to provide the following:
- Your full name
- Your date of birth
- Your driver’s licence number
- Your current residential address
- Your previous addresses if you have moved in the last five years
- Your current employer or a previous employer
- Name of the organisation to which you last applied for credit
- A daytime telephone number, and
- Your signature
N.B. Please clearly state you are requesting a copy of your Credit File. This service will take 10 days from your request.
This free service is for personal records only.
Now you have your free credit history and its not as good as you expected? Still looking to refinance a house or even buy a home?
Give Lifeline Financial Services a call on 1300 559 164. We are happy to assist you in understanding your finance options no matter what the state of your credit history.