Credit repair is the process of removing negative and false entries in your credit report.
Almost every Australian adult will have a credit report. If you’ve had a utility account, applied for a credit card, a mobile phone account or a loan, you will probably be listed with the credit agencies. A credit report can be positive or negative. If your credit report is not as positive as you’d like it to be, this can lead to problems.
A less than perfect credit score could lead to problems. You could be denied a loan in the future or, if approved, you may end up having to pay a higher interest rate and higher fees on your loan.
If there are issues with your report you may want to engage in a process of credit repair. Basically, credit repair means looking at your credit report and doing what you can to improve it. There are two types of listings that you may want to repair:
Incorrect listings – Sometimes mistakes happen. If there is a disputed listing on your account then creditors or the credit reporting agency need to be contacted. You will need to provide them with information proving that a listing on your report is inaccurate and you will need to ask them to remove this listing from your account.
Negative listings – Some listings on your credit report may be accurate. You may have been slow with repayments in the past or there may be a bill that you defaulted on. There are differing amounts of time that these listings can stay on your account (from 2-7 years.) Being better with money into the future is the only real way to improve negative listings.
Improving your current financial situation can happen by following some or all of the steps outlined below. If you become proactive, your credit score can improve dramatically by the time you next decide to apply for a loan. This is especially true with the new information collected with comprehensive credit reporting.
Pay attention and follow these tips to improve your credit score:
Pay your bills on time – With comprehensive reporting, late repayments are listed on your credit report. As such, you need to make sure that you pay all your bills on time. Prompt repayments are appealing to lenders. If you make your repayments on time you’ll be more likely to have any applications you make approved and you’ll likely find that you are offered lower interest rates.
Decrease your credit limits – If you have a large credit limit that you aren’t using you should consider lowering it. A large credit limit can be off-putting for lenders as they may consider you a risk of getting into further debt and this could harm your ability to make repayments to then.
Don’t apply for credit unless you need it – Every time you apply for credit it is listed on your credit report. Lenders don’t like multiple credit applications so you need to be careful when applying for credit.
Consolidate your debts – Sometimes debt consolidation is a good option. Multiple debts can create issues as each debt has a different interest rate and different repayment dates. Whilst you may be able to afford repayments if you have multiple repayments and are disorganised you might find you miss some of your repayments. Debt consolidation can save you money with lower interest rates (or sometimes even 0% balance transfer options) but you’ll also be better organized with only one repayment date.
Repay any defaults – If you have a default on your account, even a historical one, but you find you’re in a better financial position now, repay any defaults on your account.
If your credit score is not where you’d like it to be it’s not the end of the world. With this post, we’ve explained to you how credit repair can improve your credit score and help you when you next apply for credit. If you would like to speak to one of our experts, please don’t hesitate to get in contact today.