Your credit report contains information about your credit history that’s collected from credit providers, courts and other organisations by companies such as Veda, D&B and Experian, who are Australia’s largest credit reporting agencies.
These records are used if you apply for credit or a loan, and most people who have used credit will have one. They are used to assess if you can repay a loan, credit card or mortgage and also for things like increasing your limit on an existing loan or credit card.
Unless you check your credit report regularly, you may only realise that you have a problem with it when you apply for credit and it’s refused. If this happens, you should apply for a copy of your credit file from the relevant agency and find out exactly what has caused the problem.
If you’ve discovered a default on your credit file, don’t despair. A repair may be easier to carry out than you think and you could be on your way to hassle-free credit in the future. Here are a few tips that could help you mend that file and give your credit report an improved bill of health.
Check for mistakes Credit reports can often contain mistakes that can affect your credit rating such as personal details, mistaken defaults and judgements or incorrect details of credit history. If you believe something has been recorded in error, contact the relevant credit reporting agency who should help you resolve the error.
Pay off the debt Contact your credit provider to negotiate paying off any unpaid debts. Defaults, unpaid debts, judgements, part IX, X and bankruptcy are the main reasons for a loan or line of credit to be refused. Your first step to improving your credit report is to get them paid off. Concentrate on paying off the debt with the highest interest rate first and then move on to those with lower rates. Australian law states that once the debt has been paid, the lender must update the listing on your credit file as soon as is practicable. However, even after you have paid it off, a paid default listing will remain on your credit file for five years.
Identity crisis? Sometimes, the first time you find out there’s a problem with your credit score is when you’re rejected for a credit application based on a loan default you never knew you had. Take steps to protect your identity like installing anti-virus software or destroying documents that contain personal details that could be used by fraudsters. This is yet another prime reason why checking your credit report regularly is essential.
Accentuate the positive You should also check your personal information as often these details can improve your credit rating. Things like staying with the same employer for over two years or living at the same address for a long time can improve the lenders consideration of your application for credit.
Consolidate Put all your debts into one easy-to-manage consolidation loan and it may just assist you in paying your debts off faster. This can often be the best way to make headway when you owe money, and is recommended by many debt advice agencies as the sensible way forward.
Getting in touch with the credit reporting agencies Below are the contact details for the main Australian credit reporting agencies. They can provide you a copy of your report so you can check for errors, amend information and very importantly, understand exactly what lenders get to see.