Regardless if we understand it or not, our credit report has a notable influence on our lives. It’s kind of like our health; we don’t treasure good health until we lose it. Most people don’t even find out 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 surprise to some, given that even one overlooked payment that is disclosed by your creditor can stay on your credit report for up to seven years.
So, what is a credit report? A credit report is a report that points out information about your financial history with lenders. In recent years, credit reports have been revamped to place greater emphasis on favourable history such as paying your bills on time, but overwhelmingly, credit reports are used by financial institutions to gauge your ability to repay debts by assessing your past behaviour.
When financial institutions review your credit report, you generally either get a pass or fail so any default regardless of its severity can have a long-lasting effect on your financial opportunities for years to follow. Although finding solutions to strengthen a bad credit report can be complicated, there are particular things you can do to strengthen it. Luckily, we’ve gathered a list of ideas that you can try to strengthen your credit report and your overall financial health.
Examine your credit report for any mistakes
The first step is to inspect your credit report to discover exactly what it contains. 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 uncommon for errors to be made on credit reports which can have a negative effect on your financial abilities. Read your credit report extensively and challenge any mistakes that you find to ensure your credit report accurately mirrors your financial history. Some common oversights 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 unveil any errors, advise the credit reporting agency in writing so these listings can be modified or removed to mirror your true credit history.
Pay your bills on time
Lots of people underestimate how important 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 speak with all your lenders and ask them to automatically debit your bank account every 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 sure 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 specific details within your credit report which lenders will view positively. As an example, if you are married, have been working for the same workplace for more than two years, or you are a property owner, then this information will enhance your credit report. Creditors generally view this information in a positive light and it can assist in future credit applications. If you find that this sort of information is missing from your credit report, inform the credit reporting agency and request that it be included.
Steer clear of excessive credit applications
Each time you make an application for a line of credit, it is recorded on your credit report. Obviously, too many applications for credit will have an unfavorable effect on your credit report and the way in which creditors view your financial behaviours. It is paramount that you are shrewd 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 rejected, wait a respectable amount of time before applying again.
Look at a debt consolidation loan
Certainly, it can be very challenging to manage your debts when then you have lots of them. Overlooking just one debt repayment can turn into a default, which will stay on your credit report for a minimum of five years. Think about a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Typically, 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, reach out to our friendly team at Bankruptcy Experts Wangaratta on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertswangaratta.com.au