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Australia has what can only be referred to as a ‘negative’ credit reporting regime. In other words, only the stuff you do wrong makes it onto your credit file. This puts the consumer who has had a credit problem at a terrible disadvantage when applying for credit because lenders ALWAYS focus on the negative. It also puts them on the back foot even before the lender considers your income and assets.
The other thing that is on every single credit report is the number of enquiries that have been made against your file. An enquiry is recorded every time you apply for credit. This can potentially be a bad thing especially if you’re trying to obtain new credit.
So what can you do to build a good credit file? For starters, don’t make an application for credit if you think it won’t be approved. There are many great resources on the web that can help you determine your borrowing capacity (most bank websites have them). Use them first to see if you can afford a loan and don’t cheat by increasing your income or failing to record a liability like your credit card limit or a car loan. Likewise, if you’ve had a credit problem in the past mention it to the people you are making the application with and see what they think.
The next thing you can do is pay off your debt early where possible but ALWAYS make your payments on time. Lenders get suspicious when payments are missed on a regular basis as it’s a sign that you have cash flow problem or are struggling with your debt. By paying the loans off early a potential creditor will see that you have good budgeting skills and are keen to get out of debt.
Don’t apply for credit or take credit unless you NEED it. Having too much available credit can hurt you. Do you really need $25K of credit limit if you only use 3K every month or not at all? Most people get on an ego trip when a pre-approved credit card for $20K shows up in the mail. DON’T be tempted; you don’t NEED IT!
Lastly, if you are knocked back try to find out why. Some lenders will tell you. Also, if you are knocked back, don’t keep putting in applications trying to get approved by someone. All those enquiries show up on your file and will make a credit provider suspicious.
So what should you do if you have had a credit problem such as a default? The first thing to do is contact the credit provider and sort out payment. The quicker you get the matter resolved the better it will be for you. Also, ALWAYS get a letter from the credit provider confirming that you have paid off the account and keep it for at least 5 years.
If you have more serious issues, such as bankruptcy or multiple defaults there are agencies that can help repair your credit file. One such agency is DR Capital: www.creditrepairaustralia.com. They are experts in helping people repair their credit file.
Finally, I recommend you obtain a copy of your credit file once a year. You can obtain a FREE copy of your credit file upon request from Veda Advantage: www.vedaadvantage.com .It can take up to 14 days but it’s free. You can get it faster by paying a small fee, but unless you’re in a hurry take the free option.
The other thing that is on every single credit report is the number of enquiries that have been made against your file. An enquiry is recorded every time you apply for credit. This can potentially be a bad thing especially if you’re trying to obtain new credit.
So what can you do to build a good credit file? For starters, don’t make an application for credit if you think it won’t be approved. There are many great resources on the web that can help you determine your borrowing capacity (most bank websites have them). Use them first to see if you can afford a loan and don’t cheat by increasing your income or failing to record a liability like your credit card limit or a car loan. Likewise, if you’ve had a credit problem in the past mention it to the people you are making the application with and see what they think.
The next thing you can do is pay off your debt early where possible but ALWAYS make your payments on time. Lenders get suspicious when payments are missed on a regular basis as it’s a sign that you have cash flow problem or are struggling with your debt. By paying the loans off early a potential creditor will see that you have good budgeting skills and are keen to get out of debt.
Don’t apply for credit or take credit unless you NEED it. Having too much available credit can hurt you. Do you really need $25K of credit limit if you only use 3K every month or not at all? Most people get on an ego trip when a pre-approved credit card for $20K shows up in the mail. DON’T be tempted; you don’t NEED IT!
Lastly, if you are knocked back try to find out why. Some lenders will tell you. Also, if you are knocked back, don’t keep putting in applications trying to get approved by someone. All those enquiries show up on your file and will make a credit provider suspicious.
So what should you do if you have had a credit problem such as a default? The first thing to do is contact the credit provider and sort out payment. The quicker you get the matter resolved the better it will be for you. Also, ALWAYS get a letter from the credit provider confirming that you have paid off the account and keep it for at least 5 years.
If you have more serious issues, such as bankruptcy or multiple defaults there are agencies that can help repair your credit file. One such agency is DR Capital: www.creditrepairaustralia.com. They are experts in helping people repair their credit file.
Finally, I recommend you obtain a copy of your credit file once a year. You can obtain a FREE copy of your credit file upon request from Veda Advantage: www.vedaadvantage.com .It can take up to 14 days but it’s free. You can get it faster by paying a small fee, but unless you’re in a hurry take the free option.