Your bad credit rating need not be forever. Here’s our top tips to rescue your credit rating from the dumpster.
Once you have your report to hand, go through it with a finetooth comb.
Start rebuilding your credit history one prompt payment at a time.
When it comes to evaluating your credit worthiness most lenders will have different criteria. However, one thing they do have in common is an unwillingness to lend to someone with a bad credit rating. A negative credit rating can impact your future potential to borrow and prevent you from getting that credit card, personal loan or mortgage. But don’t despair. There are steps you can take to help remedy your bad credit blues and get your borrowing power back on track.
Forewarned is forearmed
As they say, knowledge is power. The first step you need to take is to gain a copy of your credit report to get a full picture of your credit history. You can apply for a free credit report through a certified credit reporting body (CRB) and you will find a list of these at the Office of the Australian Information Commissioner. To gain access to your report you will need to provide your full name, address, date of birth, previous address and driver’s licence number. It can take up to 10 days to receive your free report orr you can pay a fee to get instant access.
The report you receive will contain the same information as that which any lender would receive if you were to apply for credit. You can expect to find information on your financial history, including late payments and any defaults.
Check for mistakes
Once you have your report to hand, go through it with a finetooth comb. It’s not uncommon for there to be mistakes including incorrect details of your credit history and debts that are past their expiry date (bad debt usually remains on your credit history for up to 7-years). If you have a common name this can be even more likely. If you do find errors, you need to report them to the CRB to have them removed. Unsubstantiated errors will be removed immediately. Others may need proof via documentation before they will be removed.
Consolidate your debt
If you have multiple credit cards and personal loans and feel you are in danger of defaulting on your payments, you should consider consolidating your debt. Putting all of your debts into a single debt consolidation loan will ensure your debt becomes more manageable. It will eliminate any current defaults and assist you in ensuring you stay on top of your debt by converting all your debts into a single more manageable loan payment.
Rebuild your reputation
Start rebuilding your credit history one prompt payment at a time. Make sure any payments you make, whether it’s for your utilities, your mobile phone or your credit card, are paid on time. By meeting your monthly obligations on time every month, you can begin to arrest your bad credit rating and turn the tide to reflect your new financial stability.
Set up direct debits
A sure-fire way to ensure you don’t miss a payment is to set up your bills to be paid automatically from your bank account on the due date. Or if you’re worried you may not have the funds when they fall due, organise for payments to be debited the day after you get your salary. This will not only take the stress out of bill paying but you can those annoying late payment fees goodbye forever.
Spotlight your credit stability
Thanks to recent changes to Australia’s credit reporting laws you can now also include positive information in your credit report. Have you been with the same employer for a couple of years? Ask to have it included in your report. Are you in a stable relationship? Another bonus!
Plan a plan and stick to it
Of course, the most important element of fixing your credit rating is to make sure you don’t ‘reoffend’. Make positive changes to your spending habits. Write a budget and stick to it. Put aside money every month for a rainy-day fund and whatever you do, don’t make late payments. Put a plan in place and stick to it and you can repair your credit rating sooner than you think.