Your credit file is a major part of your finance application.

But what is it, and how do you dig your way out of a debt hole?

Building a credit history is unavoidable, even if you never borrow a cent from anyone in your life. If you’ve ever set up the electricity to your house, bought a mobile phone or had a bank account, you will have a credit file that keeps track of your ability to accrue and repay debt.

Your credit file is the key to getting finance now and in the future, and lists all the good and (unfortunately) the bad. If you’ve ever defaulted on a debt, that stays listed for up to seven years – bankruptcy filings for ten – which may seem harsh, but just because you have a blemish or two, doesn’t exclude you from ever applying for finance.

If you show that you can your making a conscious effort to fix your credit history, lenders will look much more favourably at you over someone who is asking to borrow more money while ignoring their obligation to service their existing debt.

Your credit history also isn’t immune from risk – scattershot approaches by collection agencies with the incomplete or incorrect information can wind up on your credit file. There are processes to dispute incorrect credit history – often by just calling the creditor to inform them that you don’t recognise the debt and asking them for the details that are registered against the default.

The name of the collection agency should be on your credit file so you can get in touch with them directly but, if you can’t spare the time to wait on hold, you can pay a third-party to go through the hassle of sorting out an incorrect listing on your credit file.

Credit providers must attempt to notify if they plan to lodge a report that will impact on your credit history, and only after a debt over $150 is more than 60 days overdue (commercial debts can be listed if they are over $100.)

Buying something on credit isn’t necessarily a bad thing, you just have to be mindful about your obligations as a debtor: if you can be disciplined enough to repay your loan to a credit provider promptly, knowing the fees and charges that come along with the convenience, it will prove your responsibility as a borrower and finance providers in the future will be more likely to offer you better deals (such as lower interest rates) in order to get you to sign up with their company.

After 3 months, if you’ve resolved issues on your credit file – another application for finance could be treated differently.

At CarBeagle, we are all about being upfront & transparent with you on both the little and big things when it comes to your loan. We are serious about responsible lending and protecting your credit file, and will workshop your specific scenario with a number of financiers to get you the best deal.