How To Check And Maintain Your Credit Rating
Your credit rating is just like your health. You can get regular check-ups and maintain it, or you can wait until something goes wrong before you get it fixed. Being aware of your credit file history can go a long way to keeping it in check.
GRAHAM DOESSEL addresses some common questions.
WHAT is my credit rating?
Your credit rating is really a file on your personal or business credit history and is collated by the major credit reporting agencies on anyone who has ever been credit-active. Your credit rating is then checked by any financial institution or credit provider and is used to assess both the amount you are able to borrow and your ability to repay the loan.
What is defined as a ‘bad’ credit rating?
In broad terms, any credit defaults, court actions or writs, external administrations, and bankruptcy are all recorded on your credit file and would be considered ‘bad’ credit history by most credit providers.
In this current economic climate, basic defaults or even too many credit enquiries or applications for credit may be considered to be tarnishing your credit rating.
How do I know if I have a bad credit rating?
Many people don’t realise how easy it is to have a default slapped on their credit file.
If a bill is more than 60 days late (including rates, power, mobile phones) then a provider has the right to notify you of their intentions to record this default on your credit file. Even if this bill is paid and noted on your file, this default usually remains on your record for 5 years.
What are the repercussions of having a bad credit rating?
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.
What is a credit rating repairer?
Increasingly, the public is seeking out third party credit file repairers. These clients are often time poor and would prefer to employ someone to negotiate with creditors on their behalf. Others have already had dealings with creditors and have had no luck in removing judgments and defaults from their file.
In many cases where people have attempted to remove the default themselves, they have come across difficulties and defaults have not been cleared. Often the creditor will explain to the client that defaults DON’T EVER get removed. The best they can do is mark the listing as paid (if it’s been paid). This may not be sufficient to ensure credit is obtained with some lenders.
A credit file repairer usually goes through processes which allow them to access your information without initially alerting the creditors of their intentions. This then allows them to work with the file and having knowledge of current legislation – enable them to actually remove the default. It may be worthwhile discussing your case with a credit file repairer before attempting negotiations with creditors yourself.
What can I do to ensure I maintain a good credit rating?
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 to 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 websites have 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 bodies Equifax (Formerly Veda Advantage), Dun & Bradstreet, and TASCOL (Tasmanian Collection Services). Your credit report will be sent to you within 10 working days. Or you can order one here.
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 lawyer 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.
If individuals are unskilled (not lawyers) in the current legislation they can do more harm than good when it comes to credit rating repairs.
Visit the MyCRA Lawyers website www.MyCRALawyers.com.au to get more information or help with your credit file or contact us tollfree 1300 667 218.