Whether we acknowledge it or not, our credit report has a notable influence on our lives. It’s sort of like our health; we don’t appreciate good health until we lose it. Many individuals 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 bombshell to some, considering that even one overlooked payment that is reported by your lender can stay on your credit report for as much as seven years.
So, what is a credit report? A credit report is a record that stipulates details about your financial history with financial institutions. Recently, credit reports have been overhauled to place greater focus on constructive history such as paying your bills on time, but overwhelmingly, credit reports are used by financial institutions to examine your ability to repay debts by assessing your past behaviour.
When creditors 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. While finding solutions to strengthen a poor credit report can be tough, there are various things you can do to improve it. Fortunately, we’ve compiled a list of recommendations that you can try to boost your credit report and your general financial health.
Check your credit report for any errors
The first step is to inspect your credit report to discover exactly what it contains. You can do this by paying a modest fee to an agency 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 an unfavourable impact on your financial abilities. Read your credit report thoroughly and challenge any errors that you find to make sure your credit report accurately reflects your financial history. Some general errors that can occur are:
- Errors in personal details
- Wrongful defaults and judgements
- Old defaults and judgements
- Incorrect information relating to your credit history
If you find any errors, notify the credit reporting agency in writing so these listings can be altered or removed to reflect your true credit history.
Pay your bills on time
A lot of people underestimate how important it is to pay your bills on time. Occasionally, people can be forgetful simply because they have too many bills to pay, so it’s a wise idea to contact all your creditors and ask them to automatically debit your bank account each month. Usually, your creditors would be more than happy to do this as posting 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 additional information to your credit report
There are specific details throughout your credit report which lenders will view favourably. For example, if you are married, have been working with the same company for more than two years, or you are a homeowner, then this information will enhance your credit report. Creditors typically view this information in a positive light and it can assist in future credit applications. If you uncover that this type of information is missing from your credit report, alert the credit reporting agency and ask that it be added.
Steer clear of excessive credit applications
Every time you apply for a line of credit, it is recorded on your credit report. Obviously, too many applications for credit will have a negative impact on your credit report and the way in which lenders view your financial behaviours. It is very important that you are prudent and selective when requesting credit and only apply when you are optimistic it will be accepted. Likewise, if you recently had a credit application rejected, wait a respectable amount of time before applying again.
Look at a debt consolidation loan
Generally, it can be very hard to control your debts when then you have lots of them. Forgetting just one debt repayment can turn into a default, which will stay on your credit report for at least five years. Look into a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Typically, interest rates on debt consolidation loans are fairly 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, phone our friendly team at Bankruptcy Experts Geraldton on 1300 795 575, or alternatively visit our website for additional information: www.bankruptcyexpertsgeraldton.com.au