Planning to buy a property? Here's a tip for you – you may be unaware certain aspects of your debt history/credit file including bill defaults and applications for loans and credit cards, are on file and made available to lenders and other credit providers.
The information found on your credit filecould hold details that will see your home loan application declined.
Here are five tips for keeping your credit file clean:
- Understand where your money is going and pay on time. Ensure responsible payment of your credit cards, bills and personal loans by contributing funds before the due date. Monitor your accounts closely and look for any discrepancies.
- Make it automatic. Missed and late payments are one of the most common defaults on a credit file. Paying bills and minimum repayments before or on time will help prevent unwanted fees. A good way to ensure you don't miss repayments is to set up auto transfers from your savings account.
- Don't go overboard. It is easy to go over your credit limit, miss paying bills or fall into the habit of thinking “another debt won't hurt”. You can quickly lose track of spending and fall behind, which is when defaults appear on your credit file. Have a budget and stick to it.
- Just say no. Credit providers may tempt you to increase your limit. Resist unless absolutely necessary; don't increase spending simply because you can. If you are only just getting by you should think about reducing your credit limit until in the clear and perhaps cut up your credit card/s.
- Pay more than the minimum. Paying debts off in full or making repayments above the minimum amount and restricting your spending will help ensure you pay your balance off and do not tarnish your credit file.