Whether we realise it or not, our credit report has a serious effect on our lives. It’s kind of like our health; we don’t appreciate good health until we lose it. Lots of people don’t even know they have a poor credit report until they make an application for a line of credit and it’s disapproved. It can come as quite a shock to some, considering that even one overlooked payment that is documented by your lender can stay on your credit report for a maximum of seven years.
So, what is a credit report? A credit report is a record that points out details about your financial history with lenders. Recently, credit reports have been redesigned to place greater focus on constructive history like paying your bills on time, but overwhelmingly, credit reports are used by lenders to calculate your ability to repay debts by assessing your past behaviour.
When creditors inspect your credit report, you commonly either get a pass or fail so any default regardless of its severity can have a long-lasting influence on your financial possibilities for years to follow. Whilst finding solutions to improve a bad credit report can be difficult, there are particular things you can do to enhance it. Luckily, we’ve put together a list of ideas that you can try to improve your credit report and your overall financial health.
Inspect your credit report for any oversights
The first step is to examine your credit report to learn exactly what it features. You can do this by paying a small fee to a company like ‘Check My Credit File’ (https://www.mycreditfile.com.au). It’s not unusual for oversights to be made on credit reports which can have an adverse influence on your financial abilities. Read your credit report carefully and challenge any mistakes that you find to make sure your credit report accurately mirrors your financial history. Some common mistakes that can occur are:
- Mistakes in personal information
- Wrongful defaults and judgements
- Old defaults and judgements
- Incorrect information regarding your credit history
If you uncover any mistakes, alert the credit reporting agency in writing so these listings can be amended or removed to mirror your true credit history.
Pay your bills on time
People underestimate how vital it is to pay your bills on time. In some cases, people can be forgetful simply because they have too many bills to pay, so it’s a clever idea to speak to all your creditors and ask them to automatically debit your bank account every month. Usually, your lenders would be more than happy to do this as sending paper statements is time-consuming and costly. By placing all your bills on autopilot, you can be certain that they’ll be paid in full and on time, which will have a positive impact on your credit report
Add extra information to your credit report
There are certain details within your credit report which creditors will view positively. For example, if you are married, have been working with the same employer for over two years, or you are a property owner, then this information will strengthen your credit report. Lenders typically view this information in a positive light and it can help you in future credit applications. If you see that this kind of information is missing from your credit report, notify the credit reporting agency and request that it be included.
Keep away from excessive credit applications
Each time you apply for a line of credit, it is noted on your credit report. Obviously, too many applications for credit will have an unfavorable impact on your credit report and the way in which lenders view your financial behaviours. It is crucial that you are reasonable and selective when requesting credit and only apply when you are optimistic it will be accepted. At the same time, if you recently had a credit application declined, wait a respectable amount of time before applying again.
Think about a debt consolidation loan
Of course, it can be very challenging to control your debts when then you have lots of them. Neglecting just one debt repayment can become a default, which will stay on your credit report for at least five years. Take into consideration a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Usually, interest rates on debt consolidation loans are quite low, and you’ll eliminate any further defaults which will have a positive impact on your credit report. If you’re interested in a debt consolidation loan, call our friendly team at Bankruptcy Experts Fremantle on 1300 795 575, or alternatively visit our website for additional information: www.bankruptcyexpertsfremantle.com.au