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Best Ways to Improve a Bad Credit Report

Whether we acknowledge it or not, our credit report has a serious effect on our lives. It’s sort of like our health; we don’t appreciate good health until we lose it. Many individuals don’t even know they have a bad 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 lender can remain on your credit report for a maximum of seven years.

So, what is a credit report? A credit report is a document that specifies information about your financial history with financial institutions. In recent times, credit reports have been redesigned to place greater focus on constructive history like paying your bills on time, but overwhelmingly, credit reports are used by lenders to analyse your ability to repay debts by assessing your past behaviour.

When financial institutions inspect your credit report, you usually either get a pass or fail so any default irrespective of its severity can have a long-lasting influence on your financial possibilities for years to follow. Whilst finding solutions to boost a bad credit report can be challenging, there are certain things you can do to improve it. The good news is, we’ve put together a list of recommendations that you can try to enhance your credit report and your overall financial health.

Examine your credit report for any oversights

The first step is to review your credit report to find out exactly what it contains. You can do this by paying a small fee to a company like ‘Check My Credit File’ (https://www.mycreditfile.com.au). It’s not rare for errors to be made on credit reports which can have an unfavourable effect on your financial capabilities. Read your credit report thoroughly and challenge any mistakes that you discover to ensure your credit report appropriately reflects your financial history. Some common oversights that can occur are:

  •  Mistakes in personal details
  •  Wrongful defaults and judgements
  •  Old defaults and judgements
  •  Incorrect information relating to your credit history

If you uncover any oversights, 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

Individuals underestimate how vital 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 smart idea to contact all your creditors and ask them to automatically debit your bank account each month. Generally, your creditors would be more than happy to do this as sending paper statements is time-consuming and costly. By placing 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 additional information to your credit report

There are certain details throughout your credit report which lenders will view positively. As an example, if you are married, have been working with the same company for more than two years, or you are a property owner, then this information will boost your credit report. Lenders generally view this information in a positive light and it can help you in future credit applications. If you see that this type of information is missing from your credit report, alert the credit reporting agency and ask that it be provided.

Steer clear of excessive credit applications

Every time you apply for a line of credit, it is noted on your credit report. Naturally, excessive applications for credit will have an unfavorable effect on your credit report and the way in which creditors view your financial behaviours. It’s important that you are prudent and selective when requesting credit and only apply when you are confident it will be accepted. Furthermore, if you recently had a credit application denied, wait a respectable amount of time before applying again.

Look into a debt consolidation loan

Generally, it can be very tough to oversee your debts when then you have lots of them. Forgetting just one debt repayment can become 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. Commonly, 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 contact with our friendly team at Bankruptcy Experts Canberra on 1300 795 575, or alternatively visit our website for further information: www.bankruptcyexpertscanberra.com.au