Before applying for credit, take time to consider the following 3 points.
1. What’s on your credit file?
No one wants to experience the bitter taste of rejection, especially when applying for some form of credit. A single negative listing on your credit file is enough for lenders to reject you for that car loan or mobile phone deal, without even telling you why.
Before you apply for credit you should first get a copy of your credit file, companies like Experian, Veda and Dunn & Bradstreet hold your credit history, which is used by creditors to determine your credit score and ‘credit worthiness’. A low score resulting from a negative listing or even too many enquires, can result in you be unable to secure credit for up to 5-7 years.
If you have any questions about negative listings on your credit file and want to know how to have them removed, Budget Credit Repair employs experts with over 15 years experience to get you credit ready.
One of the biggest mistakes you can make when applying for some form of credit is not taking time to look at the small print. Today banks and credit providers are required to provide you with full costing and terms and conditions relating to their financial products and services.
Never sign anything until you understand and are willing to accept their Terms & Conditions.
Four things to look out for are:
- Application Fee – you should negotiate to have this removed. Never pay an application fee.
- Interest Rate – watch out for promotional rates. While they look good in the short term, can you still afford the product or service at the full rate?
- Account Keeping Fees – some products may offer lower interest rates, but have higher account keeping fees. Always do the math…
- Repayment Terms – If you are paid on a monthly basis, a weekly repayment schedule can lead to a cash flow misalignment. Negotiate better terms or walk away.
3. Is it the right time to borrow?
The Australian credit market has recovered from the GFC meltdown of 2007, but credit isn’t as easily accessible as it was in 2009. With interest rates at a record low, it would make sense to borrow money to finance your new car or overseas holiday, but before you do… remember unemployment is still relatively high and slowing growth in China can only lead to fewer opportunities.