Guide To Credit Repair
Learn how you can improve your own credit to give your next application a better chance at being approved.
There is no single definition of “bad credit” and there are varying degrees, but having any negative listings on your credit file can make your financial life difficult. Whether you have too many credit enquiries, a default or excessive debt, improving your credit score can put you in a better financial position and can help get you access to financial products and services you may need.
Order a copy of your credit file
In order to improve your credit you have to know what’s on your credit profile. If you haven’t order your credit file in the previous 12 months you can receive a free copy in 10 working days. You’re also entitled to a free copy if you have been rejected for credit in the previous 90 days. If neither of these apply to you or you want to receive your report in 24 hours, you can pay a fee to have your credit file from one of the main credit reporting bodies.
Checking your credit file
Your credit file contains a range of personal, financial and credit information, much like a borrower’s report card. When checking the information on your credit file make sure that it’s accurate and that nothing is listed twice. If this is the case, contact Veda to have the mistake rectified.
- Identity information. This includes your full name and gender, date of birth, current address, employment history and driver’s licence number.
- Public record information. This would include debt agreements, court judgments, writs and summons, bankruptcies and personal insolvencies.
- Monthly repayment history. This sections details the monthly payment details for your credit accounts, such as personal loans, credit cards, mortgages and other credit accounts in your name.
- Credit account information. Information detailing type of accounts you’ve held, their open and close dates, the current credit limit and whether any accounts are overdue.
- Credit enquiries. Credit enquiries for the last five years are listed on your file.
- Defaults. Any debts that are overdue by more than 60 days are listed as defaults and included in this section of your credit file. Other serious credit infringements might also be listed here.
Identifying negative listings
The following are what may be classed as “negative” listings and can have a negative impact on your credit rating.
- Missed payments. Missed payments on your mortgage, personal loan, or credit card debt appear on your credit file and can lower your credit score and make it difficult to obtain new credit. Repayment history indicators (RHI) will remain on your file for two years.
- Defaults. Debts that are either listed as defaults or overdue can be very damaging to your credit reputation, as they indicate that you cannot be trusted to repay debts in time or are likely to default. These listings remain in your file for five years with serious credit infringements remaining on file for seven years.
- Court judgments. Credit providers are wary of lending to someone with a court judgement, bankruptcy, personal insolvency or debt agreement case listed on their file. These kind of listings remain on your file for varying periods depending on when the case is resolved, although most court judgments will stay on your file for five years while writs and summons will stay for four.
- Multiple credit enquiries. While making enquiries for credit in itself doesn’t hurt your credit score, if you make multiple credit applications in a short space of time it could indicate risk and lower your credit score. The pattern of your credit enquiries are also directly related to how long your credit file has been active – a younger credit file with multiple credit enquiries may look riskier than an older credit file with the same number of enquiries.
Improving your credit rating
There may be no quick fixes to removing credit infringement listings such as defaults, court actions or missed bill payments, but this doesn’t mean that you can’t repair your credit rating. Here are a few steps you can take to better your credit score:
- Identify and deal with negative listings. Ordering a copy of your credit report annually can help you identify erroneous or unlawful listings on your credit file. Listings made in error can include debts listed twice, accounts that belong to someone else or debts erroneously listed as defaults.
- Consolidate your debts. If you are having trouble keeping up with repayments on your loans, you can consolidate them into a single debt account for easier repayments, and to prevent default listings being added to your credit file. You could also save on loan fees, making your debts easier to manage in the long term.
- Have incorrect listings removed. If there are any incorrect or duplicate listings on your credit file, get in touch with the credit reporting bureau to have the listings removed. You can also contact the credit provider directly who may be able to deal with the listing.
- Negotiate with lenders to repay or clear debts. Negotiating with your credit provider for a repayment plan that suits you can help prevent debts being listed as defaults in your credit file.
- Consider financial counselling. This can help you manage your finances better, ensuring you do not get into unnecessary debt that you could struggle to pay. You can contact the free financial counselling service on 1800 007 007.
The importance of checking your credit file
The first step to improving your credit score is to order a copy of your credit file from a credit reporting agency in Australia. You have the right to get a free copy of your file from one of the main reporting agencies or pay a fee to get it dispatched to you urgently. Here are the main reasons to check your credit file:
- To check for incorrect personal details. Your current address, employment history and full names have to be accurate so as to prevent incorrect listings and to protect you against having your identity stolen.
- Check for incorrect defaults, court actions or repayment history indicators. If you come across an erroneous listing on your credit file, you can request to have this removed to raise your credit score. Defaults can be incorrectly listed due to creditor error.
- To initiate credit repairs. If you notice negative listings that are affecting your credit score, you can then hire a credit repairer to add notes to some listings or potentially remove other negative entries entirely.
Have more questions about credit repair?
What is a credit score?
This is a rating that is calculated using information on your credit report and that can be used to assess your credit responsibility and likelihood to default.
Where can I get assistance with my credit file?
There are various services that will provide you with tools and assistance in regards to your credit file. If you want to enlist the help of the Credit File Experts, follow the link at the top of the page.
What are the problems with repairing credit on my own?
The main issue with attempting to dispute listings on your credit file on your own is your limited knowledge of credit reporting legislation that would lead to such listings remaining in place or being removed.