Whether we realise it or not, our credit report has a notable impact on our lives. It’s sort of like our health; we don’t treasure good health until we lose it. Many people don’t even know they have a poor credit report until they make an application for a personal line of credit and it’s rejected. It can come as quite a surprise to some, considering that even one overlooked payment that is documented by your creditor can stay on your credit report for a maximum of seven years.
So, what is a credit report? A credit report is a document that specifies information about your financial history with lenders. Recently, credit reports have been redesigned to place greater attention on favourable history like paying your bills on time, but overwhelmingly, credit reports are used by lenders to examine your capability to repay debts by assessing your past behaviour.
When lenders inspect your credit report, you generally either get a pass or fail so any default irrespective of its severity can have a long-lasting effect on your financial possibilities for years to come. Even though finding solutions to strengthen a bad credit report can be complicated, there are specific things you can do to boost it. Fortunately, we’ve compiled a list of recommendations that you can try to strengthen your credit report and your general financial health.
Examine your credit report for any mistakes
The first step is to inspect your credit report to discover exactly what it comprises of. You can do this by paying a small fee to a business like ‘Check My Credit File’ (https://www.mycreditfile.com.au). It’s not unusual for errors to be made on credit reports which can have a negative influence on your financial abilities. Read your credit report thoroughly and dispute any errors that you find to ensure your credit report accurately mirrors your financial history. Some typical oversights that can occur are:
- Errors in personal details
- Wrongful defaults and judgements
- Old defaults and judgements
- Incorrect information concerning your credit history
If you unmask any mistakes, advise the credit reporting agency in writing so these listings can be modified or removed to emulate your true credit history.
Pay your bills on time
Lots of people underestimate how important it is to pay your bills on time. Occasionally, individuals can be forgetful simply because they have too many bills to pay, so it’s an intelligent idea to contact all your creditors and ask them to automatically debit your bank account every month. Generally, your lenders would be more than happy to do this as posting paper invoices is time-consuming and expensive. By putting all your bills on autopilot, you can be sure that they’ll be paid on time and in full, which will have a positive effect on your credit report
Add additional information to your credit report
There are specific details within your credit report which lenders will view positively. For instance, if you are married, have been working for the same company for over two years, or you are a homeowner, then this information will improve your credit report. Creditors typically view this information in a positive light and it can assist in future credit applications. If you see that this type of information is missing from your credit report, alert the credit reporting agency and ask that it be provided.
Keep away from too many credit applications
Every time you request a line of credit, it is noted on your credit report. Obviously, excessive applications for credit will have a harmful effect on your credit report and the way in which lenders view your financial behaviours. It is crucial that you are sensible and selective when requesting credit and only apply when you are optimistic it will be approved. Additionally, if you recently had a credit application turned down, wait a respectable amount of time before applying again.
Take into consideration a debt consolidation loan
Naturally, it can be very challenging to control your debts when then you have lots of them. Overlooking just one debt repayment can turn into a default, which will remain on your credit report for at least five years. Contemplate a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Generally, interest rates on debt consolidation loans are quite low, and you’ll eliminate any further defaults which will have a positive effect on your credit report. If you’re interested in a debt consolidation loan, speak with our friendly team at Bankruptcy Experts Parramatta on 1300 795 575, or alternatively visit our website for further information: www.bankruptcyexpertsparramatta.com.au