7 ways to keep a squeaky clean credit file and get that home loan or finance….
By Graham Doessel.
Many people don’t realise how easy it is to get a bad credit rating, or how difficult credit repair can be.
A clear credit file is so important because it is the key to your financial freedom. In today’s economic times, it is essential that your credit file be kept clear of any black marks.
Any defaults (overdue accounts which have lapsed past 60 days), writs, judgements or bankruptcies which are recorded on your credit file will remain there for 5 years.
A bad credit rating can prevent you from obtaining a mortgage, car or personal loan with banks but many don’t know it can also prevent you from obtaining a simple mobile phone plan.
So how do you go about avoiding a credit rating default and keep your credit rating looking as healthy as possible? Outlined below are 7 essential tips:
1. Use credit
It may be tempting to get rid of all credit. But it is easier to obtain credit for a mortgage or business loan if there is some kind of reference of your credit history on your credit file. Taking out small accounts such as a mobile phone plan may be a good choice as long is each payment is made on time.
2. Pay bills on time
If you pay all accounts on time and by the due date, there is less chance you could receive a default listing on your credit file. If you can’t pay your account by the due date don’t bury your head in the sand – call the creditor and try to work out some type of payment plan.
This contact may be enough to ensure your credit rating is not tarnished. If you receive a bill you don’t agree with, it is still essential to pay the account by the due date to avoid a default listing. Better to make the payment and be reimbursed for the difference than be paying for 5 years for someone else’s mistake.
3. Be smart with credit
Credit should be the key to financial freedom, but often it is the source of a great many problems in people’s lives. Yahoo’s Money and Your Life website has help for managing debt and finances. This article has some great tips for keeping credit under control and making it work for you http://au.pfinance.yahoo.com/moneyand yourlife/managing-debt/article/-/8044026/expert-tips-for-cutting-credit-card-debt/.
4. Be aware of excessive credit enquiries.
You should only apply for credit if you feel you have a very good chance of being approved. Declined credit applications on your credit file can hinder your chances of obtaining a home loan. Likewise, you should only apply for credit you have full intention of pursuing. Every application is noted on your credit file, but not whether it was approved. If you go ‘credit shopping’ and apply for credit everywhere – the lender may consider you a bad risk due to those excessive credit enquiries showing up on your credit report.
5. Educate yourself on ways your credit rating can be damaged
It may not be simple overdue accounts which leave you with a bad credit file. People who have recently divorced or separated are particularly vulnerable to problems due to joint accounts. Also victims of identity theft can have a number of defaults on their credit file they are unaware of. Often times simple errors can occur which you aren’t aware of until you apply for credit and are flatly refused.
6. Check your credit file regularly
It’s important to check your credit file and understand what lenders may be seeing on your credit rating. Usually every 12 months should pick up any discrepancies that may need addressing.
Under current legislation you can obtain your credit report for free from the major credit reporting agencies Veda Advantage, Dun & Bradstreet, and TASCOL (Tasmanian Collection Services). Your credit report will be sent to you within 10 working days.
7. Fix credit rating
If you do find credit rating defaults that you believe have errors, are unjust or you feel just shouldn’t be there – there is a good chance they can be removed. Many creditors will tell individuals that a default can never be removed, but can be marked as paid if it has been paid. This may not be enough to ensure credit is obtained with many lenders.
You may be better off seeking the services of a reputable credit repair company than attempting to negotiate with creditors on your own to fix your credit rating. The credit repairer will negotiate on your behalf, working with creditors and understanding current legislation and how it applies to your credit file.
Sometimes if individuals are unskilled in the current legislation they can do more harm than good when it comes to credit rating repairs.
Visit the MyCRA Credit Repairs website www.mycra.com.au to get more information or help with your credit file or contact us tollfree 1300 667 218.