Seven tips for improving your credit report with a credit card.
There are some simple ways to keep your credit file in good shape, such as avoiding too many credit enquiries. If you already have bad credit, though, avoiding multiple credit enquiries might not be enough to get it back in shape. If you’re looking to improve your credit file, use this guide to learn how to improve a damaged credit score, whether it’s worth paying to use a credit repair agency and the common mistakes to avoid.
Here are seven tips for fast credit repair:
1. Don’t apply for credit over and over.
Applying for multiple credit accounts in a short space of time can do further damage to your credit rating. More than one rejected application for credit is a red-flag to potential lenders. If an application for a loan or a card gets knocked back, think about why you’ve been rejected for credit and address this issue before trying again. If you’re trying to repair your credit quickly, avoid any applications until you’ve gone through some of the tips below.
2. Order a copy of your credit report.
When it comes to repairing bad credit, start by ordering a copy of your credit report. A credit report contains information about your financial history. It shows all the times you’ve applied for credit, how much you applied for, the application outcome as well as your history of repayments.
You are entitled to one free credit report per year from each of the credit-reporting agencies in Australia: Veda, Experian, Dun & Bradstreet and the Tasmanian Collection Service (for people in Tasmania). Note that it can take up to 10 business days to receive your report for free, but most agencies also offer fast-tracked copies for a fee.
Once you receive your credit file, go through it to get a clear understanding of the information that is listed. Pay particular attention to any unfamiliar accounts that could indicate an error on your account. You should also look for black marks such as defaults, which you can then aim to repair by reaching out to creditors, or by using a credit repair agency.
You can also receive a free copy of your credit score through finder every six months. If you’re working to improve your credit file, reviewing your credit score every six months will help you determine whether you’re on the right track.
3. Remove negative items from your credit report.
Credit repair is the process of removing negative listings from your credit file. There are a few reasons why you can appeal for a default listing on your credit report to be removed. Common mistakes from creditors can include failure to notify you about the overdue amount, listing a default on your credit report while a debt was in dispute or listing a default when you had a payment arrangement in place.
A credit repair agency will investigate each listing on your credit report on your behalf. Credit repair companies can charge high fees, but they do bring expertise. You can, however, contact the companies responsible for the listings on your credit file yourself if you wish.
4. Consider using the ombudsman.
In some cases, using the services of an external dispute resolution service such as the state financial ombudsman can achieve the same result as a credit repair service. The main difference is ombudsman services are free.
You should always contact your creditor before going to the ombudsman or a credit repair service. The financial institution or service provider should want to work with you to find a way for you to meet your financial obligations in a way that suits all parties. If you cannot come to an agreement, then it’s time to seek further help.
5. Consider using a dispute letter template.
Credit bureaus and debt collection companies require written correspondence from you before they will act on any complaint you may have. If you’ve tried to write an effective dispute letter from scratch, you know how time consuming it can be. A quick online search can help you find credit repair letters and templates that you can customise in minutes.
6. Focus on repaying your debts.
If you’ve found that each negative listing on your credit report is genuine, you’ll need to focus on repaying your debts. Keep in mind that even if you pay off a negative listing, the default could remain on your credit file for five years (or up to seven years if it’s a serious infringement). It’s important that each negative listing is paid as your chances of obtaining future credit are slim when you have current outstanding debts.
7. Make timely repayments.
Make sure you pay your debts on time. Your credit file contains information about late and missed payments. For example, if you’ve missed a credit card payment and you’re looking at a home loan, you’re chances of approval will be reduced as financial institutions generally require at least three months of good repayment history before considering your mortgage application.Back to top
Mistakes to avoid when repairing your credit file
- Doing nothing. Unpaid debts can lead to bankruptcy and if you don’t bother to improve your credit file, it will decrease your chances of loan approval in the future.
- Try to improve your credit file on your own. Unfortunately, repairing your credit file on your own can be a difficult process. If you’re not sure where to start, contact your bank to discuss your options or get in touch with a credit repair service to receive some assistance. It may come at a cost, but you’re more likely to repair your credit file more efficiently with the assistance of a professional.
- Don’t be impatient. Remember that credit repair can take time. Credit repair agencies can only work with removing incorrect listings on your credit file. If a default listing is genuine, it will remain on your credit file and cannot be removed.
How much will it cost to repair my credit file?
Credit repair agencies can offer to help improve your credit history for a fee. The exact cost of the service depends on a number of factors such as the number of defaults to be investigated, negotiated and removed.
Credit repair companies work and charge in stages. For example, Princeville Credit Advocates charge in three phases: you pay a fee for an assessment of your case, a fee for investigating each listing and a fee when the listing is removed. These fees can run into the hundreds of dollars. Credit repair companies are experts in your credit file and many Australian choose to use their services for a fast and thorough investigation.
If you’re worried that your credit rating could affect your chances of loan or credit card approval, hold off on applying. Instead, order a copy of your credit report, go through the details and consider your credit repair options. That way, you can apply for new credit products when you’re confident your score is up to scratch.Back to top