If you needed credit today, would you be able to get it? You might think so, but credit providers need more than your gut feel to go on. Which is where credit health reports enter the picture.
These reports are compiled by credit bureaus and are essentially a picture of your financial behaviour, based on your credit record. Without you even realising it, you build up a credit record every time you open an account, take out a credit card, get a loan or sign a lease agreement. And every payment you make – or miss – adds to the picture.
A credit health report includes the following information:
- Personal information that identifies you, including your name, ID number, all known addresses and telephone numbers, and your employment history.
- Details of all the accounts you have with banks, shops, credit card companies and other credit providers.
- Your payment history for every account over the past 24 months.
- Any legal action that has been taken against you for the non-payment of credit.
- Details of everybody who has asked for copies of your credit record in the past year. This means you can see who has looked at your credit report and when. It is very important that you check no enquiries were made of which you were not aware, as this could mean that someone is trying to apply for credit in your name.
- If you have ever been a victim of fraud, there will be a fraud alert on your credit report. A warning will also appear if you are under administration or debt restructuring.
Your credit report is not a secret. You can get a free report once a year and, given how big a role your credit report plays when you apply for credit, it is a smart move to do so. You have to know what your record says about you. It is also far better to identify and fix any errors proactively, rather than when you are in a tight spot and need a loan urgently.
Here are examples of the kind of information on your credit profile that could worry credit providers:
- You have opened a number of accounts in a short time.
- You have enquired about a loan at various credit providers in a short time.
- It looks as if you use one loan to pay another.
- You have too many accounts open.
- You have missed a number of payments.
- All your credit limits are at their maximum.
- Your good payment track record is too short.
- You only use one type of credit, for example, short-term loans (less than six months).
Your financial wellbeing depends on your ability to work smartly with your money. Your credit health report will give you a good indication of how well you are managing to do that.