Regardless if we acknowledge it or not, our credit report has a notable impact on our lives. It’s kind of like our health; we don’t treasure good health until we lose it. Lots of people don’t even find out they have a poor credit report until they make an application for a personal line of credit and it’s disapproved. It can come as quite a surprise to some, simply because even one overlooked payment that is disclosed by your creditor can remain 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 lenders. In recent times, credit reports have been redesigned to place greater focus on favourable history such as paying your bills on time, but overwhelmingly, credit reports are used by financial institutions to evaluate 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 regardless of its severity can have a long-lasting impact on your financial prospects for years to follow. Even though finding solutions to improve a bad credit report can be complicated, there are a number of things you can do to strengthen it. Luckily, we’ve compiled a list of recommendations that you can try to improve your credit report and your general financial health.
Check your credit report for any oversights
The first step is to inspect your credit report to find exactly what it consists of. You can do this by paying a small fee to an agency like ‘Check My Credit File’ (https://www.mycreditfile.com.au). It’s not out of the ordinary for errors to be made on credit reports which can have an adverse impact on your financial abilities. Read your credit report extensively and challenge any errors that you find to make sure your credit report appropriately reflects your financial history. Some standard 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 uncover any mistakes, notify the credit reporting agency in writing so these listings can be adjusted or removed to mirror your true credit history.
Pay your bills on time
Lots of people underestimate how significant it is to pay your bills on time. Sometimes, individuals can be forgetful simply because they have too many bills to pay, so it’s an intelligent idea to contact all your lenders and ask them to automatically debit your bank account each month. Usually, your lenders would be more than happy to do this as sending paper invoices is time-consuming and costly. By putting all your bills on autopilot, you can be certain that they’ll be paid on time and in full, which will have a positive effect on your credit report
Add extra information to your credit report
There are a number of details within your credit report which lenders will view favourably. For instance, if you are married, have been employed by the same employer for more than two years, or you are a homeowner, then this information will improve your credit report. Lenders normally view this information in a positive light and it can assist in future credit applications. If you see that this sort of information is missing from your credit report, alert the credit reporting agency and ask that it be included.
Steer clear of excessive credit applications
Each time you apply for a line of credit, it is recorded on your credit report. Clearly, too many applications for credit will have a detrimental effect on your credit report and the way in which creditors view your financial behaviours. It is crucial that you are reasonable and selective when making an application for credit and only apply when you are confident it will be accepted. Also, if you recently had a credit application turned down, wait a decent amount of time before applying again.
Think about a debt consolidation loan
Of course, it can be very difficult to manage your debts when then you have lots of them. Forgetting just one debt repayment can turn into a default, which will remain on your credit report for a minimum of five years. Take into consideration a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Normally, 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 Lismore on 1300 795 575, or alternatively visit our website for additional information: www.bankruptcyexpertslismore.com.au