It’s important to know what’s in your credit file – do you know what’s in yours?

Knowing the state of your credit file is incredibly important when taking out a loan – so, do you know yours?

Everywhere you visit these days you’re given the opportunity to go online and rate your experience. Whether it’s a restaurant you ate at, a hotel you stayed at, or your last tinder date – ratings systems are everywhere. We use them to make informed decisions about what is good and what we should try to avoid.

Things aren’t too dissimilar in the finance world, where lenders have access to a credit file to help assess a borrower’s suitability for a loan. However, while most of us know our rating on Uber, very few Kiwis know what their credit score is – but it’s hugely important.

Here are some of the top reasons why every person should know what’s in their credit file.

1. You can plan around it – particularly if your credit history is not ideal.

If your credit history is not great, it can significantly impact your options when it comes time to apply for a loan. In fact, there are many lenders with restrictive lending criteria who won’t even consider a customer who has any type of negative notation (being a ‘hit’ or mark on a person’s credit file) – no matter how minor or long ago the event occurred.

Knowing what is in your credit file before you apply for finance means those borrowers that have poor credit can plan alternatives, like going to a more flexible lender from the outset.

This also means that you limit the number of unnecessary notations that get made on your credit file. This is because each lender with whom you apply for credit makes a notation on your credit file at the time you apply for the loan – irrespective of whether you are approved or not. Too many notations can negatively impact your overall credit rating.

2. You’ll know if you have to wait to apply for finance.

If you know what has caused you to have bad credit, then it might make sense to delay applying for finance.

Anything like a credit enquiry, default or court judgement will remain on a person’s credit file for five years. So, if you know that a default on your credit file will drop off shortly, then it might make sense to wait it out to give you more options.

3. You can make sure there are no errors.

It happens more often than people think – errors are made and a person’s credit file is incorrectly noted.

These mistakes can range from tiny little things like incorrect name data to much bigger issues like having false records of unpaid bills or mortgage payments. It pays to find out what is in your credit file to ensure a mistake doesn’t stop you from achieving your financial goals.

How can you access your credit file?

There are three different credit ratings agencies in New Zealand:

Centrix
Dun & Bradstreet
Veda Advantage

All three providers will give you your credit file for free, however if you want to get the information quickly then you might have to pay a service fee.

Lending and policy criteria and terms and conditions apply. Content on this website is general in nature and is not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on this content and should always seek specific financial advice appropriate to their own individual circumstances.