What can your credit report influence in your personal life?
How regularly do you check your credit report? If you don’t know what’s on it, there’s a chance you could have defaults against your name that shouldn’t be there.
A credit report will show you what loans you’re missing payments on, either because someone has taken out a fraudulent loan in your name or you forgot about a loan you’d taken out. There’s a lot of crucial information on there, and lenders use the document to find out about what kind of debtor you’ll be and what interest rate to offer you.
To stop bad debt affecting your life and lowering your credit score, you need to check your credit report regularly.
What does bad credit affect in Australia?
Banks are about making money and ensuring they get paid what they’re owed on time. That includes credit card payments, account fees and home loan repayments. If you have struggled to pay on time in the past, the banks will only offer you higher interest rates because you pose more of a risk. A higher interest rate represents more money overall for the lender, but is also an incentive to pay what you owe on time. If you don’t, the total amount you repay will be significantly higher than what you borrowed.
You should be wary when opening a joint account with someone who has a bad credit report as well. It’s not a nice conversation to have, but if your name is on an account shared with a partner who can’t handle their finances, your personal credit report could be affected too. When they forget to pay a credit card bill on your joint account, both names on the statement will have a default marked on their credit reports.
Before you open a joint account with your partner or friend, have that hard conversation – it could save your financial future by removing the risk of a default going on your credit report for a mistake they make.
How a bad credit report affects home loans
A bad credit report can affect more than your ability to open an affordable credit card account – it can also stop you from taking out an affordable home loan. Make sure your credit score is clean and healthy (tip: you can check yours right here on Credit Simple).
A bad credit report can stop you from getting a favourable home loan.
The future of your family could be jeopardised by poor choices in your past. They do eventually come off your credit report after five to seven years, but that’s a long time to wait if you’re trying to start a family. One major step you’ll want to take with your partner and potentially children is buying a family home that you can make your own and grow into over some time. That’s not something you can do in a rental, which is why buying is such an attractive option.
Being financially irresponsible or falling into money troubles can affect your personal life and your family for years and years. It’s vital that you keep your credit report clean by paying bills on time and repaying loans in a timely manner. The consequences for not doing so could stop you from opening a new credit card account or even buying a dream family home.
For more information about your credit report, what it affects in your personal life and how to check it regularly, get in touch with Credit Simple today.
Francis is Credit Simple's resident content writer and social media guru. He's passionate about saving money, so we pay him 5 cents to go out and fetch the team coffees every morning. Thanks Frankie.All stories by: Francis Church