You’ve decided that you want a new credit card — a balance transfer card to be exact. You choose the combination of a balance transfer card and rewards card in the Velocity NAB credit card. But wait! Don’t apply just yet. Did you remember to check your credit file first? If not, you may be in for an unpleasant surprise.

When you apply for a new credit card, the credit card company is going to review your credit file. In it they’ll learn about your employment status and any delinquent debts you might have. What they find there will play a significant role in whether or not they approve your credit card application. The fact that they reviewed your credit file will even be recorded there — for five years! In other words, whether or not this credit card company approves your application, the fact that you even applied will be recorded in your credit history (and may affect future application decisions — a lot of recent enquiries can make you appear to be a bigger risk because it looks like you’re desperate to get credit).

Before you give anyone else permission to review your credit card, you should know what’s in it for the following reasons:

1. There might be errors about past debts.

If you paid off a debt, but the creditor hasn’t updated your credit file yet, it could appear to the new lender that you’re in more debt than you really are (causing them to reject your application or give you less than favourable terms).

2. You might be a victim of identity theft or credit card fraud.

If you know you’ve always paid all of your bills on time, you might feel like you don’t have to review your credit file. Think again. If you’ve been a victim of identity theft, you might not realize another debt has been run up in your name without your authorisation. That credit card fraud is often never discovered until the consumer applies, and is rejected, for additional credit.

3. Your employment information might be out of date.

Since your income and employment information play a role in the credit card application approval process, you should verify that the information is up to date before applying.

4. Your list of current creditors might not be accurate.

In addition to listing your past due accounts, your credit file also contains a list of your current creditors — your open accounts. If accounts are open but not listed for some reason, you might appear to have a lack of sufficient credit history in the eyes of a new credit card company. If there are accounts listed that are no longer open, it might look like you already have too much credit available to you. Either could play a role in having a credit card application declined.

5. Checking your credit file after applying is too late!

Remember, once you apply for a credit card, that enquiry will stay on your credit file for five years. There’s no going back. If you failed to spot errors before applying, you risk compounding the problem for the next time you apply for a credit card (because your report will show that you applied for credit, but that the company isn’t on your current creditor list, telling them there was a reason you were denied).

Don’t let simple errors or identity theft determine what your credit history looks like for the next several years. Be proactive and always review your credit file regularly, especially before applying for a new credit card!