How can I fix my credit rating?
Is your credit score making lenders wince? You may struggle to obtain mortgages, car loans, credit cards and other forms of borrowing if you fail to fix your rating.
The goods news is that you’re aware there’s a problem if you’re reading this, so let’s explore some of the ways you can repair your credit rating in Australia.
Defaults are payments on a credit account that are at least 60 days overdue and worth $150 or more.
1. Identify mistakes
Even a single payment default can have a dramatic impact on your creditworthiness, which is why you should scour your credit report for any costly errors.
Your personal details could have been mixed up with someone else’s, or perhaps you’ve fallen victim to identity theft? Maybe you’ve remedied a payment misunderstanding with a company, but the information is still showing up on your report?
If you spot anything out of place, contact the credit provider to make sure black marks are removed from your file. You wouldn’t want to be rejected for your dream home or car because of a simple mix-up with a mobile phone bill or credit card company.
2. Pay off any existing debts
How can you fix your credit rating when there are no errors on your file? The simple answer is that you’ll have to bite the bullet and rectify any defaults or other problems on your report.
Defaults are payments on a credit account that are at least 60 days overdue and worth $150 or more. They remain on your account for five years even once you’ve paid off the debt, so you should try to clear your arrears if you want any chance of having a clean credit history.
A clever way to repair a credit rating when you have multiple debts is to secure a consolidation loan. As the name suggests, these loans bring together all your debts and pay them off in one stroke, leaving you with a single monthly payment to cover.
3. Build up good credit karma
They say prevention is better than cure, so once you’ve repaired your rating as much as you can, it’s time to focus on building a good credit file for the future. How? Follow these simple tips:
- Avoid making any late payments;
- Don’t apply for too much credit over a short space of time;
- Ensure positive credit information is added to your profile; and
- Keep checking your credit score to stay on track.
Over time, staying credit active without committing any defaults will bring your rating back into the black.