Did you know that if you’ve made a late a payment on a credit card or loan since December 2012, you could be unknowingly damaging your credit rating?
Changes are being made to privacy laws and it now means that banks and other institutions will have access to data relating to your repayment history on your credit report, not just negative information such as refused applications, defaults or bankruptcies.
The new laws don’t come into effect until March 2014, but the history on your file will be backdated to December 2012 – so what you do now could influence any loan applications you make in the future.
Most of us have at one time or another been guilty of a late payment either through sheer forgetfulness or an unexpected budget blowout, but now more than ever it’s important to pay your bills on time.
The extra data collected on your credit report will include: account opening and closing dates, account type (credit card, mortgage, etc), credit limit and 24 month repayment history.
One of the more positive effects of the new laws is that it gives you the ability to show credit providers your reliability in paying off debts. If you are diligently paying off your credit card or loan each month, for the first time this will appear on your credit file. The changes are particularly good news for anyone who in the past has had a bad rating and younger people, who are just starting out their credit history and can now demonstrate their good repayment habits when it comes time to getting a car or home loan. Tips for maintaining a top credit report
1. Automate your bill payments. There are several options for making sure you don’t get a red flag for late or missed payments. You can get your provider to automatically direct debit your account on the due date, or as soon as you get the bill use online banking to schedule payments from your account on the payment date.
2. Keep credit card balances low. Once the new laws come into effect, credit providers will have the ability to check credit card limits and repayments history to see how well you manage your debt. It is a good rule of thumb to keep your balances within 30% of your credit limit.
3. Close unused accounts. All opened accounts are considered to be potential debt so if you have a card in your wallet you no longer use, close it.
4. Shop around for the best deal before applying. Each time you make a new credit enquiry it will be noted in your credit report. While this in itself isn’t enough to stop you from getting approved for new credit as banks only use these reports as part of their decision process, it is better to do your shopping around before making applications so that your credit report remains as clean as possible.
5. Watch your credit report. It is a good idea to get a copy of your credit report to make sure all of the information collected on your file is correct. You may do the right thing but mistakes can happen and with credit card fraud and identity theft on the rise it is good to be vigilant. Be on the lookout for outdated information, unfamiliar enquiries and any billing or payment issues that have been rectified but not cleared up on your file.