Whether we understand it or not, our credit report has a significant effect on our lives. It’s sort of like our health; we don’t appreciate good health until we lose it. Most individuals 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, given that even one missed payment that is reported by your lender can remain on your credit report for as much as seven years.
So, what is a credit report? A credit report is a record that specifies details about your financial history with lenders. In recent years, credit reports have been revamped to place greater importance on constructive history like paying your bills on time, but overwhelmingly, credit reports are used by creditors to calculate your ability to repay debts by assessing your past behaviour.
When lenders inspect your credit report, you normally either get a pass or fail so any default regardless of its severity can have a long-lasting influence on your financial possibilities for years to follow. Even though finding solutions to enhance a poor credit report can be challenging, there are a number of things you can do to improve it. Fortunately, we’ve assembled a list of recommendations that you can try to enhance your credit report and your overall financial health.
Check your credit report for any errors
The first step is to check your credit report to find exactly what it contains. You can do this by paying a modest fee to an agency 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 a harmful influence on your financial capabilities. Read your credit report carefully and dispute any oversights that you find to make sure your credit report appropriately reflects your financial history. Some standard errors that can occur are:
- Mistakes in personal information
- Wrongful defaults and judgements
- Old defaults and judgements
- Inaccurate information concerning your credit history
If you unveil any mistakes, notify 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
A lot of people underestimate how crucial it is to pay your bills on time. Occasionally, people can be forgetful considering that they have too many bills to pay, so it’s a wise idea to speak with all your lenders and ask them to automatically debit your bank account every month. Usually, your creditors would be more than happy to do this as delivering paper invoices is time-consuming and expensive. By putting all your bills on autopilot, you can be certain that they’ll be paid in full and on time, which will have a positive effect on your credit report
Add extra information to your credit report
There are certain details within your credit report which creditors will view positively. For example, if you are married, have been working for the same company for more than two years, or you are a homeowner, then this information will boost your credit report. Lenders normally view this information in a positive light and it can assist in future credit applications. If you uncover that this kind of information is missing from your credit report, inform the credit reporting agency and request that it be added.
Steer clear of excessive credit applications
Every time you make an application for a line of credit, it is noted on your credit report. Obviously, too many applications for credit will have a negative impact on your credit report and the way in which lenders view your financial behaviours. It’s important that you are sensible and selective when requesting credit and only apply when you are confident it will be accepted. At the same time, if you recently had a credit application declined, wait a respectable amount of time before applying again.
Contemplate a debt consolidation loan
Certainly, it can be very tricky to manage your debts when then you have lots of them. Neglecting just one debt repayment can become a default, which will remain on your credit report for a minimum of five years. Take into consideration a single debt consolidation loan which will accumulate all your debts into one, single, monthly repayment. Generally, interest rates on debt consolidation loans are fairly low, and you’ll eliminate any further defaults which will have a positive effect on your credit report. If you’re interested in a debt consolidation loan, phone our friendly team at Bankruptcy Experts Townsville on 1300 795 575, or alternatively visit our website for more information: www.bankruptcyexpertstownsville.com.au