Whether we realise it or not, our credit report has a substantial effect on our lives. It’s kind of like our health; we don’t appreciate good health until we lose it. Most people don’t even find out they have a bad credit report until they make an application for a line of credit and it’s rejected. It can come as quite a shock to some, considering that even one overlooked payment that is disclosed 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 stipulates details about your financial history with lenders. In recent years, credit reports have been redesigned to place greater emphasis on favourable history like paying your bills on time, but overwhelmingly, credit reports are used by creditors to evaluate your capability to repay debts by assessing your past behaviour.
When financial institutions check 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 opportunities for years to follow. Even though finding solutions to repair a bad credit report can be challenging, there are specific things you can do to enhance it. Luckily, we’ve assembled a list of recommendations that you can try to enhance your credit report and your overall financial health.
Review your credit report for any mistakes
The first step is to inspect your credit report to find exactly what it features. 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 out of the ordinary for mistakes to be made on credit reports which can have a damaging effect on your financial capabilities. Read your credit report meticulously and challenge any oversights that you find to ensure your credit report appropriately reflects your financial history. Some common mistakes that can occur are:
- Errors in personal information
- Wrongful defaults and judgements
- Old defaults and judgements
- Incorrect information relating to your credit history
If you discover any errors, inform the credit reporting agency in writing so these listings can be amended or removed to emulate your true credit history.
Pay your bills on time
Lots of people underestimate how critical it is to pay your bills on time. In some cases, individuals can be forgetful simply because they have too many bills to pay, so it’s a wise idea to talk to all your lenders and ask them to automatically debit your bank account every month. Often, your creditors 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 in full and on time, which will have a positive effect on your credit report
Add additional information to your credit report
There are certain details throughout your credit report which lenders will view positively. For instance, if you are married, have been working for the same company for more than two years, or you are a property owner, then this information will strengthen your credit report. Creditors commonly 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, inform the credit reporting agency and request that it be provided.
Avoid too many credit applications
Every time you apply for a line of credit, it is noted on your credit report. Evidently, too many applications for credit will have an unfavorable effect on your credit report and the way in which lenders view your financial behaviours. It is essential that you are reasonable and selective when making an application for credit and only apply when you are confident it will be approved. Moreover, if you recently had a credit application rejected, wait a respectable amount of time before applying again.
Contemplate a debt consolidation loan
Generally, it can be very hard 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 a minimum of five years. Look at 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, phone our friendly team at Bankruptcy Experts Perth on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertsperth.com.au