Part of having a savvy financial attitude is knowing exactly where you stand. When you’re weighing up your options for property investment or enquiring about taking out a home loan, it’s important to have all the facts before you make the next step – and your credit report can be a great tool to have in your arsenal.

Very few Australians are aware that they can get a hold of a copy of this document – and if they were aware, they’re often not interested in what it has to say. While looking over your credit-related history can be a confronting experience in some cases, it can help you in many ways. Here are a few to keep in mind. 

What is a credit file?

Otherwise known as a credit report, your credit file is a complete overview of your financial activities. It lists all the different types of credit you’ve taken out, when you opened them, as well as the extent of their balance and the amount you’ve paid off in the past. Any overdue debts or payments, as well as any bankruptcies (in the last 7 years), court judgements, debt agreements and personal insolvency agreements (in the last 5 years) will also appear on the report. 

Why is it important?

From this collection of information, your file will be given a score and lenders use this to gain a picture of your reliability as a borrower. This makes your financial background incredibly important – essentially, it will dictate what kind of loans you’ll be eligible for and what interest rates you’ll need to pay on them.

You don’t necessarily need a perfect score to qualify for a loan – lenders aren’t expecting every borrower to have a completely clean history, but there are some components of your score that might be detrimental. For example, long-standing debts harm your chances of obtaining a lot more than a recent missed payment. It’s worth taking a look over the report to find out where you can improve your position before approaching a mortgage broker.

Call Eclipse Financial today to get the know how on your credit!