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Why it pays to keep an eye on your credit rating

Credit rating is an important consideration for banks and lenders when looking into any application or funds request you make.

What is a credit rating?

First things first, a credit rating is an extensive list of an individual’s overall credit history – its overall purpose is to assess an individual’s ability to repay debt, and so determines how much credit can be granted before any transaction takes place (or whether any credit can be granted at all).

Typically, credit ratings have been used by lenders and banks but it is increasingly common for their use in setting insurance premiums, recruitment and real estate rents.

The report accumulated against an individual’s name could include financial history – including, but not limited to, instances of cheques bouncing, unpaid bills and overdrawn accounts. It also looks at an individual’s current assets and liabilities.

How can I obtain a copy of my credit rating?

To obtain a copy of your credit report, apply in writing to Veda Advantage (PO BOX 964 North Sydney, NSW, 2059) or access online. You will need to provide the following forms of identification:

  • Full name
  • Date of birth
  • Driver’s license number
  • Two forms of relevant identification, such as driver’s license, passport, birth certificate or a document issued by an official body such as a bank statement or utility bill.
  • Current residential address
  • Previous address
  • Current employer (or most recent)
  • Contact number
  • Signature.

You are allowed access to your credit report free of charge, unless you require a faster turnaround time (in which case, charges are incurred). The report must be sent within 10 days of the request.

What steps can I take to keep my credit rating blemish-free?

So you’ve received your credit report and it’s not as squeaky clean as you’d like?

When managing bills and accounts, remember that a default is listed on your credit rating if it is a serious issue of nonpayment or 60 days has elapsed since payment was due.

In managing your bills, maintain a budget and, if late payment is anticipated, contact the institution for a payment extension or plan. Debtors should be in the loop as to when they will receive payment – they can be quite forgiving if they are aware of a situation, and can offer possible alternatives.

Keep in mind that you have the right to alter any incorrect information or report any false accusations of credit defaults – if any information is incorrect, contact Veda Advantage for a solution in amending it. Remember, to a lender, your trustworthiness is only as good as your credit rating.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Tuesday, September 14, 2010

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