It’s only when you apply for a home loan, a car loan or a new credit card that these lapses come to light - when “the bank says no” and declines the application.
How does the bank know? It is because the bank checks your credit file when you apply for credit.
What is a credit file? It is a record of your personal information, and a record of all credit enquiries, credit defaults, and so forth, dating back for at least 5 years. Veda has the largest collection of credit files in Australia - about 10 million credit files, and is the standard credit check.
How can you access your credit file with Veda? Veda is required to provide a report based on the credit file – free of charge, once a year. Go to
What if there is an error or black mark or out of date information on your credit file? You can request Veda to correct the credit file, which Veda will do for free if you provide the correct information.
So, if the file shows an unpaid telco bill, and it has been paid, produce an email or letter from the telco company confirming payment, and Veda will mark it “paid”.
Veda will not remove the black mark from the file, until five years after it has been marked on the file. In the meantime, your credit score will improve because it is paid.
Do not believe credit repair companies who will not be able to remove the black mark, unless of course you never owed the debt in the first place and there is no court judgment
Other common credit file errors are that the same debt appears twice, credit reports for different individuals are combined by mistake, and a ‘clear out’ mark appears because the telco, credit company, and so forth has not recorded a change of address.
These are my nine rules to improve your credit file when making loan applications:
1. Pay on time – pay within 14 days, and definitely within 60 days of the due date for bills of $150 (or more).
2. Do not ‘shop around’ for loans – keep to as few as three credit enquiries per year.
3. Pay out payment defaults - and have the credit file marked ‘paid’.
4. Stay in the same job (job stability) and stay at the same home address for at least 2 years
5. Hold off making loan applications for 2 years after a credit blemish is recorded
6. Avoid being a company director – because if the company goes into administration, receivership or liquidation, a black mark is recorded and an explanation is required.
7. Transfer accounts when moving – particularly electricity, gas and telephone.
8. Update personal information on the credit file - particularly addresses to avoid a clear out listing.
9. Reduce limits or cancel credit cards and store cards, when applying for a loan because they are treated as fully drawn when calculating monthly commitments.
You can contact Anthony J Cordato at ajc@businesslawyer.com.au
