You can order a copy of your credit file for free from Veda.com.au. This is a great resource to show to your mortgage broker so they can better assess suitable loan options.
This is Day #9 of the 30 Day Property Journey where over the next 30 days, I will be taking you through activities you can do to become a more confident investor and move closer to your goal of buying your first property.
Today we will be discussing how you can order a free copy of your credit file so you can understand it. This will help you to see if there is anything holding you back or if you are in a good position to get a loan.
Why Is Your Credit File Important?
First I want to share with you why this is so important. Getting access to your credit file and understanding what’s on your credit file is going to give you a good idea of how difficult it’ll be for you to get lending.
Getting access to your credit file is easy and it’s free. The things you want to look out for when you do get access to it is whether there is any default on it like late bill payments or defaults that have gone through to debt collector.
They did change the credit rules in March of 2014 so there are more details are on your credit file than ever before. It is also important now more than ever to pay all of your bills on time and make sure that you’re not behind on anything. Issues on your credit file can stick around for a long time. A lot of defaults will stay on your credit file for 5 years and some can even remain on it for 7 years.
My mortgage broker Brad (and if you want to contact Brad there’s a referral fee that I get if he ends up helping you with your mortgage) said that smaller issues on your credit file are not a big deal if you only have 1 or 2. However having bigger issues on your file can be a major issue if you want to get lending.
I was talking to him about an electricity bill that fell through to a debt collector for over $2,000 that I had back in winter when we lived on the central coast. We lived in non-insulated house with two babies and since we couldn’t pay it back on time it went through to the debt collector and we were then able to pay it off.
I was really worried about my credit file though and thought that the default would be a huge mark on my credit file. However, he said that there is a good chance that it was taken off of my credit file when they sent it to the debt collectors and that I should check my credit file.
Luckily it wasn’t there so I’m safe. I am still waiting on my wife’s credit file to see if it’s on hers. But in terms of me as a major income earner, it was not on mine so that was a really happy thing for us.
Getting Your Credit File
In order for you to get access to your credit file you simply need to go on the internet and go to a website call Veda. You will see on their homepage something that says “looking for your credit history”.
One of the 1st things that you’re going to see is details about a credit report and a button that’s going to say “get your credit report”. Click on that button and it will take you to a page which talks about your credit file and your credit reputation.
Now they are going to try and sell you on an annual subscription for 12 months (which is $80) and that would give you access to any updates that happen on your credit file during that 12 months. What you want is your free credit file so if you scroll down the page a bit on the right side you can see “free file find out more”. Click on that and it will take you to the page where you can get access to your credit file. All absolutely free.
Now it will take some time to get to you if you choose to get it for free. I think it takes about 2 weeks to come out. You can get it express but that’s going to cost you $70.00 so if you don’t need it urgently then what you want to do is get it for free. They have a little link that says it will get to you in 10 working days so just complete the form and it will take you to a page where you can fill out all the details and you can get the form either posted or emailed to you.
All you need to do then is go through and enter all of your details, make sure they confirm your details and it will be sent out to you.
It’s good to know that someone from Veda is probably going to give you a call and try to up-sell you to the annual one which is $79.00 per year. Just let them know that you’re not interested. They are pretty good about it and they might try to be pushy so just be prepared that they will want to sell their annual option if you go with the free option.
Once the credit file comes, keep it somewhere safe. You could get it emailed to you so you have it on file and just store it in Dropbox. Store it somewhere you’re going to be able to find later on. That way when you do get onto your mortgage broker you can actually take your credit file to your mortgage broker. They can identify any issues and they can let you know what your options are.
This puts you in a better position to know exactly where you are and helps put your mortgage broker in a better position to get the right loan for you. If you go in and give them incomplete details then they might give you some loan options that aren’t actually the best loans for you which might force you to go to different lenders.
This is going to save you so much time and make things so much easier with your broker. All you have to do is go to veda.com.au and just follow the steps. You can sign up for the paid option if you really want that update. If not then you can get it for free and it comes out within 10 working days.
That concludes Day #9. Tomorrow we’ll be discussing doing your first cash flow analysis on the property which means understanding exactly how much a property is going to cost you every single week or how much its going to bring in every single week.
You can begin to analyze property and assembly what you can afford when it comes to investment property. If you’re looking at investment property instead of houses, you can also tell the difference between a negatively-geared property and a positive cash flow property as well as how to calculate that.
We will be covering that in tomorrow’s episode and it is something that I do on every property I look at. You always want to do a cash flow analysis so you understand exactly what it is that this property is going to return or cost. I am going to show you exactly how to do that and how to help you with that as well.
Until tomorrow remember to stay positive.