If you have borrowed money, whether as a loan or even signed a mobile phone contract, you have earned yourself a credit history. Each time you apply for further credit, the lender will run a check on your credit file to determine the level of risk they take on by lending you money.

With the increasing incidence of identity fraud, it’s smart to check your file every year. Don’t wait until a loan application is denied to find out if your history is affecting your future.

Know your credit history

A credit report includes information on whether or not you have paid your bills; if you have paid them on time; or defaulted on any loans. Based on the information in your file, lenders may choose to increase your interest rate to cover your perceived risk, or may refuse you credit altogether.

Visit the website of the Office of the Australian Information Commissioner and go the page on “Accessing your credit report” where you will find details on the various free and paid services available.

It’s a good idea to get a copy of your credit history before you apply for finance. Knowing your rating not only improves your chances of getting your application approved quickly, but if you have an excellent history, you may be able to use it to negotiate a better deal.

Clear up disputed records

If you come across one or more entries on your credit report that you believe are unfairly impacting on your rating, whether it’s a disputed phone bill or a card limit being exceeded, contact the credit providers direct to resolve these issues. Be aware that a payment default will remain on your file for five years.

A check will also show you if there have been any attempts at identify theft, in which people have tried (successfully or otherwise) to gain credit in your name. Over 126,000 Australians were the victims of identity theft as reported by the Australian Bureau of Statistics in April 2016, so this is not something to be ignored.