Best Ways to Improve a Bad Credit Report
Whether we understand it or not, our credit report has a considerable effect on our lives. It’s kind of like our health; we don’t cherish good health until we lose it. Many individuals don’t even realise they have a bad credit report until they apply for a personal line of credit and it’s rejected. It can come as quite a shock to some, given that even one overlooked payment that is documented by your financial institution 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 creditors. In recent years, credit reports have been overhauled to place greater importance on constructive history such as paying your bills on time, but overwhelmingly, credit reports are used by creditors to gauge your ability to repay debts by assessing your past behaviour.
When lenders inspect your credit report, you commonly either get a pass or fail so any default irrespective of its severity can have a long-lasting effect on your financial prospects for years to follow. Although finding solutions to repair a poor credit report can be tricky, there are specific things you can do to enhance it. Fortunately, we’ve put together a list of recommendations that you can try to enhance your credit report and your overall financial health.
Examine your credit report for any errors
The first step is to review your credit report to learn exactly what it consists of. You can do this by paying a small fee to a firm like ‘Check My Credit File’ (https://www.mycreditfile.com.au). It’s not uncommon for oversights to be made on credit reports which can have a detrimental impact on your financial abilities. Read your credit report thoroughly and challenge any errors that you find to ensure your credit report accurately emulates your financial history. Some general errors that can occur are:
- Mistakes in personal details
- Wrongful defaults and judgements
- Old defaults and judgements
- Incorrect information regarding your credit history
If you find any errors, alert the credit reporting agency in writing so these listings can be altered or removed to emulate your true credit history.
Pay your bills on time
A lot of people underestimate how critical it is to pay your bills on time. Sometimes, individuals can be forgetful considering that they have too many bills to pay, so it’s a wise idea to speak with all your creditors and ask them to automatically debit your bank account each month. Often, your creditors would be more than happy to do this as delivering 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 effect on your credit report
Add extra information to your credit report
There are specific details throughout your credit report which lenders will view favourably. As an example, if you are married, have been employed by 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 help you in future credit applications. If you discover that this sort of information is missing from your credit report, alert the credit reporting agency and request that it be provided.
Steer clear of too many credit applications
Every time you request a line of credit, it is mentioned on your credit report. Obviously, too many applications for credit will have a detrimental impact on your credit report and the way in which lenders view your financial behaviours. It is very important that you are sensible and selective when applying for credit and only apply when you are optimistic it will be accepted. At the same time, if you recently had a credit application turned down, wait a respectable amount of time before applying again.
Look at a debt consolidation loan
Naturally, it can be very tough 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. Think about a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Usually, interest rates on debt consolidation loans are fairly 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, phone our friendly team at Bankruptcy Experts Tamworth on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertstamworth.com.au