A key step towards financial health is a healthy credit report. Whether you want to take out a loan to buy a home, a credit card to earn points or a new mobile phone on a post-paid contract, a credit provider will probably want to access your credit report to decide whether or not you’re creditworthy.
Step 1: Know What’s on Your Credit Report
You have a right to a FREE copy of your credit report each year from each credit reporting body. Getting to know what’s on your credit report is the first step in taking control of it and will also let you see if there are any errors. In particular, check to make sure that there are no late payments incorrectly listed and that the credit limits for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit reporting agencies or credit providers (see the end of this article for more detail on how you can go about this).
Step 2: Keep Track of Your Credit Score
Your credit score is like a summary of what’s on your credit report and can give you a quick indication of how credit providers see you. Movements in your credit score can show whether your actions are helping to improve your credit report.
Step 3: Fill Out Credit Applications Fully and Consistently
Most of what’s on your credit report comes from you, when you fill out applications (name, address, date of birth, etc). The information that identifies you is passed on to the credit reporting body and put on your report. If you don’t fill out the application properly it can make it harder for credit providers to get a proper credit report about you.
Step 4: Don’t Forget to Make Your Payments
Make sure you make your payments on time. If you are in the habit of forgetting payments, set up direct debits or reminders. Forgetting one payment shouldn’t have too much impact, however if you regularly fall behind, it can make you look bad to credit providers.
The longer you pay your bills on time after being late, the more your score should increase. Older credit problems count for less, so the impact of past credit problems on your score fades as time passes.
Be aware that paying off a default stays on your report for five years, it will not be removed.
Step 5: Talk to Your Credit Provider if You Are Struggling to Make Payments
Many lenders and other businesses that sell things on credit must work with you if you tell them that you are struggling with your payments. This won’t rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. Seeking assistance from a financial counselling service can also help.
Step 6: Keep Your Details Up to Date with Your Credit Providers
If you change your street address or email address without informing your credit providers, they could be sending you bills to an incorrect address. You may owe them money and not know that you do, which could end up as a default on your credit report.
Step 7: Be Sensible with Credit
Managing your credit cards responsibly (paying on time) is good for your credit report and credit score. However, if you have more credit than you can comfortably afford, it can make it harder to get credit when you really need it. If you have too much credit, close down accounts you don’t use as your credit report will show what you have available, even if you don’t use it.
Also, don’t open a lot of new accounts too rapidly as you can look risky if you are a new credit user. New accounts will lower your average account age, which can lower your scores if you don’t have a lot of other credit information.
How to Fix Errors in Your Credit Report
If you find errors in your credit report, you can ask any credit provider or credit reporting body for help to fix the error. They must respond within 30 days to a request and once the matter has been investigated, you must be given a written response indicating why or why not a correction will be made. If you’re still unhappy, you can ask the independent External Dispute Resolution service to investigate the matter.
Want to Find Out What’s on Your Credit Report?
To find out more about how to access a copy of your credit report, contact me today on 0437 763 637 or email.