Whether we acknowledge it or not, our credit report has a serious effect on our lives. It’s sort of like our health; we don’t appreciate good health until we lose it. Many people don’t even find out they have a bad credit report until they apply for a line of credit and it’s rejected. It can come as quite a bombshell to some, since even one missed payment that is disclosed by your lender can remain on your credit report for up to seven years.
So, what is a credit report? A credit report is a report that stipulates details about your financial history with lenders. Recently, credit reports have been remodelled to place greater emphasis on favourable history such as 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 irrespective of its severity can have a long-lasting influence on your financial opportunities for years to come. Even though finding solutions to improve a poor credit report can be tough, there are various things you can do to strengthen it. The good news is, we’ve put together a list of recommendations that you can try to boost your credit report and your overall financial health.
Check your credit report for any errors
The first step is to check your credit report to find out exactly what it contains. 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 errors to be made on credit reports which can have an unfavourable impact on your financial capabilities. Read your credit report thoroughly and dispute any oversights that you find to make sure your credit report appropriately reflects your financial history. Some common errors that can occur are:
- Errors in personal information
- Wrongful defaults and judgements
- Old defaults and judgements
- Inaccurate information concerning your credit history
If you find any oversights, 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 important it is to pay your bills on time. In some cases, individuals can be forgetful considering that they have too many bills to pay, so it’s a clever idea to speak with all your lenders and ask them to automatically debit your bank account each month. Typically, your creditors would be more than happy to do this as posting paper statements is time-consuming and expensive. By placing all your bills on autopilot, you can be sure that they’ll be paid on time and in full, which will have a positive impact on your credit report
Add extra information to your credit report
There are a number of details throughout your credit report which lenders will view favourably. For example, if you are married, have been employed by the same company for more than two years, or you are a property owner, then this information will enhance your credit report. Creditors generally 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, notify the credit reporting agency and ask that it be included.
Keep away from too many credit applications
Every time you apply for a line of credit, it is documented on your credit report. Obviously, excessive applications for credit will have an unfavorable impact on your credit report and the way in which lenders view your financial behaviours. It is imperative that you are reasonable and selective when making an application for credit and only apply when you are optimistic it will be approved. At the same time, if you recently had a credit application denied, wait a decent amount of time before applying again.
Look at a debt consolidation loan
Generally, it can be very difficult to manage your debts when then you have lots of them. Forgetting just one debt repayment can become a default, which will stay on your credit report for at least five years. Look at 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, get in touch with our friendly team at Bankruptcy Experts Wyong on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertswyong.com.au