Repayment history indicators on your credit file

Repayment history indicators on your credit file

Your credit history is a major factor when it comes to taking out a mortgage on a house, getting a loan for a car, applying for a credit card and even when applying for some jobs

Your credit history is a major factor when it comes to taking out a mortgage on a house, getting a loan for a car, applying for a credit card and even when applying for some jobs. Having a good credit history can give you more negotiating power when you are at the bank settling on the interest rate on your home mortgage or getting a new car. Even a few negative marks on your credit file can cause you to have higher rates on loans and credit cards or could even cause you to get denied all together. It used to be that if you made a late payment or missed a payment that it simply came up as a ‘default’ but now the regulators have put in new rules that govern what kind of marks are put on your credit file.

Positive changes on your credit file

The new regulations will allow credit lenders to put ‘repayment history indicators‘ (RHI) on your credit file. This will show if you were over 60 days late on a payment over $150. Having a late payment is much better than a simple default on your credit history. RHI will still affect your credit rating but it will not be as bad as a default. RHI will however show credit lenders that you are struggling to make payments on time and they will take that into consideration when or if they offer you a loan.

For those with a bad credit file, RHI can help if you are starting to make a recovery in your credit rating since it will show that you are making payments instead of only having defaults. If you have had a history of making payments so late that they came up as defaults then now you will be able to show that you are at least making the payments. This can be a way for you to get a better credit score if you are consolidating debt and getting the loans paid off.

RHI will stay on your credit file for a maximum of two years and only lenders with an Australian credit license will be allowed to place RHI in your credit history. So make sure to pay special attention to paying your home and personal loans as well as credit card bills. The new regulations will be better for everyone since it will provide clarity into your payment history and credit lenders will be able to make better loans for those who can afford them.

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