Are you surprised your loan application was declined? Are you having trouble taking out a loan?
There is a chance that you might have a bad credit score and this is hurting your ability to get that loan.
Your credit score sums up the information in your credit report into one number, designed to represent your credit risk, or the likelihood that you will pay your bills on time.
Borrowing money from a credit provider isn’t always as easy as 1-2-3. Financial institutions and banks do not make decision on a whim when it comes to granting credit. There are a number of factors that help them decide whether you are worth the risk of lending money to or not, your credit score is one of these factors.
If your credit score is low, you can, and should find out what’s affecting it – for example, unpaid bills – and work to fix this as soon as possible.
Learn more about how you can make your credit score work in your favour with some friendly advice from Fix Bad Credit.
What is “Bad Credit”?
Whenever you take out a loan or use your credit card, you are essentially borrowing money with the intention of paying back the bank or the creditor over a certain period of time. In return for the finance provider paying the total sum now, which allows you to have the goods straight away, you agree to make regular payments of an agreed amount, on an agreed date, until the contract has been fulfilled.
Any time you make a late payment or miss one altogether, the credit provider will notify the Credit Reporting Body. The Credit Reporting Body produces your credit report, which is the information used to calculate your credit score. When payments are late, or missed, this will be noted on your credit report, and is referred to as a black mark. Essentially, the better you are at paying off those bills, the higher or better your credit score will be.
Before entering into an agreement with you, a credit provider will do their due diligence by checking this report and with the best indicator of future behavior being past behavior, the credit provider will get an understanding of your past behavior with your previous credit providers. This information, along with their own requirements, will be what they assess before they decide to do business with you.
The good news is that this happens all too often to many people; having a bad credit report is quite common. The downside is, if you have a bad credit score, trying to take out a loan in the future may prove to be a nuisance or challenge. Banks and lenders now have access to your credit history, where they can see when you have taken out past loans; past payments you have made or missed; and how long these loans have been going on.
It was only recently that banks and lenders became privy to your credit history. Recent changes made to the Comprehensive Credit Reporting, or CCR, makes it a much more detailed report on a person’s ability to pay back debt.
Do I Need to Fix a Bad Credit Score?
Your credit score can have an impact a number of areas of your life.
Have you ever:
- Applied for an account for utilities such as gas, water, electricity ?
- Set up an account for a phone or internet?
- Applied for a credit card, car loan, personal loan, or mortgage?
- Needed a pay day loan?
Each of these is affected by, and can be dependent on your credit score.
Most people have seen the Harvey Norman, or JB Hi-Fi advertisements below, where they offer 60 months interest free for no deposit.
They certainly sound fantastic – however, if we take a look at the fine print at the bottom, it says approved applicants only. That means they will check your credit report.
Has your bank sent you a letter stating you have been pre-approved for a personal loan, or a credit card?
Well you can bet your bottom dollar that the one thing that stands between you and this loan, and any of the above for that matter, is the information held on your credit report, and your credit score. Your credit score can even impact your dream job.
Even when you enter into a lease agreement to rent an apartment or house, the managing agent will check your credit score.
Taking out loans for a home, car, or to pay off your education is completely normal – trying to buy or pay off such big financial obligations or purchases on your own, without the help of a bank or creditor, would be a feat. So whether or not you have intentions of taking out credit in the future, you should make attempts to fix a bad credit score, this will help you avoid being rejected for future credit applications.
Don’t Let Your Bad Credit Make You Miss Out on Opportunities.
Fixing a bad credit score doesn’t happen overnight – but it is possible.
You never know when opportunity might come knocking, and we would hate for you to miss one because of your credit score. The ability to borrow money when you need it most, is a convenience that that is invaluable.
At Fix Bad Credit, we are currently working with a number of clients who are keen to take advantage of the Coronavirus economic stimulus packages, on offer until 31st December 2020. In certain states for example, first home buyers can get access to up to $90,000 in grants. However, many people are finding their applications for a mortgage to fund the remainder of their new home are being rejected due to problems on their credit report and low credit scores. Unfortunately, some people have left it too late to fix their credit and have their finance approved, meaning they are likely to now miss this opportunity as there is limited land available, and plenty of people are taking advantage of this opportunity. If they had come to Fix Bad Credit earlier, we could have helped them be $90,000 better off.
How to Fix a Bad Credit Score
Request a copy of your credit report and check for errors
Believe it or not, there might be some information in your credit report that is incorrect or false and could possibly hurt your chances of getting a loan. The good news is that you can request a free copy of your personal credit report here. If you spot any mistakes, get in contact with the credit reporting agency and have it amended. We recommend checking your credit report every year – because as well as affecting your ability to get a loan, incorrect listings can actually alert you to things like identity theft, where other people use your personal information for financial gain.
Fix Bad Credit also strongly recommends you check your credit report before you apply for any form of finance, or account. Do not be fooled by the pre-approval for a credit card, or loan, sent by banks – these will be conditional upon the provider checking your credit report and score. If there is an issue when they check then this will decrease your credit score even more.
If you do notice any mistakes, the Privacy Act and various other legislative codes are in place to protect consumers like you. This requires credit providers, as well as credit reporting agencies, to check any mistakes in your report and make changes to it, provided you present supporting documentation.
Update your information
Aside from spotting errors, make sure to also update personal information in your credit report.
For example, you might have recently moved home and your new name or address may not match that on your credit report. It might sound simple, but every correct detail you can provide, the more likely your credit score will be accurate.
Avoid repeated credit enquiries
If you make a low number of credit applications or enquiries over, say, a three-year period, then it is unlikely this will have any impact on your credit score. However, if you have many credit or loan applications and enquiries over a period of a few months, this can hurt your credit score – even if you don’t end up taking out the loan.
Such a pattern of enquiries is damaging, as it reflects on the applicant as having a desperate need for credit, which can potentially point to deeper financial problems, such as an inability to manage money effectively. Whilst having a high number of credit enquiries on your report won’t damage your score in the same way as a default will, it can still prove a barrier to getting approved for credit.
Repay on time, every time
A history of overdue payments or unpaid bills will have significant impact on your credit score, so it is very important to ensure you make payments when they are due.
It’s easy to miss a payment, especially in crazy times like these, so consider setting up direct debit payments for all of your bills. A direct debit automatically takes out the right amount of money from your account when a payment is due, meaning you can get on with life reassured that you won’t miss paying that bill. You can easily set up a direct debit payment scheme online.
Direct debit payments are ideal for people who have a fixed income because they can easily gauge how much money they need to allot for such expenses in advance. They then can be prepared to have money taken out of their accounts without hurting their finances as a whole.
BPay is another option, that works in a similar way. Being 100% Australian owned, BPay is a fantastic reliable tool, that won’t forget even if you do. Follow this link to learn more, and don’t forget to take the opportunity to watch their video, which will see them donate $1 to charity.
Both of these options above take the “oh I forgot to” out of the equation. If you lead a busy life like me, that is a great thing.
Develop Good Financial Habits Now
- Live within or below your means. This can be hard to do with the convenience of owning a credit card. Be disciplined when it comes to credit card purchases. Remove access to your credit card online and only take cash along with you whenever you go out.
- Set a budget. Consider establishing a weekly and/or monthly budget or spending plan. You can decide beforehand where chunks of your income should go and then at the end of each period, work out if you have gone over or under budget.
- Only buy what you need but remember to treat yourself. List down things you need, and then set aside a budget for things you would want for yourself. Rewarding yourself is crucial as it will help you feel better about managing your finances.
- Make it a habit to shop around. Saw a car that you think is a good deal? Not so fast there. Check out other dealerships first or better yet wait it out. You might be buying something on a whim.
- Track all of your spending. It is important to understand where your money is going. Those daily trips to your favourite coffee shop are easy to forget, but may prove to be burning a hole in your pocket when you calculate how much you’re actually spending on a latte every month.
- Always pay your bills on time. Set up a calendar alert three days before a payment is due or set up a direct debit.
- If you can afford it, create a plan to pay off debt earlier, this might include targeting those debts with higher interest rates first, or packaging multiple debts into a single debt consolidation loan.
Will My Missed Payment Information or Defaults Ever Go Away?
Late or missed payments on loans and credit cards can be recorded on your credit report for two years. Once a payment is 60 days late it is listed as a default. It’s not just finance providers that can list a default, utility and telecommunication companies can as well. A default will remain on your credit report for 5 years. If they are escalated to a serious credit infringement, this will last for up to seven years.
If you find yourself with any of the above impacting your credit report, and your credit score, all is not lost. The team at Fix Bad Credit have been using our legal expertise, experience, and knowledge of the legislation, to find where credit providers may have breached their contractual compliance. As a result we have an outstanding success rate of negotiating the successful removal of listings on over 5000 credit reports for everyday Australians, allowing them to get on with living the dream.
A Final Word
Why miss out on opportunities because of your past? Unpaid debt doesn’t need to hound you wherever you go. You need to be proactive and take responsibility over your financial situation to be in a good position money wise.
Your past does not have to determine your future. At Fix Bad Credit, we believe that no one should be declined or rejected for credit because of their credit report or score. We assure you that we can get you to the point where your credit report and credit score will not be the factor holding you back from your financial security.
Contact Fix Bad Credit for a hassle-free way to help improve your credit score. We are ready to offer assistance to those who want to take control of their finances.