Proper credit repair is your answer to a more straightforward financial future but getting it done the right way is easier said than done.
When it comes to securing a home loan, purchasing a car on finance, or getting a new credit card, your credit score will determine the outcome of your application and the interest rate on your loan. Therefore, knowing how credit scores work can help you negotiate better deals for your loan or understand why a lender rejected your application for finance.
People with poor credit scores or errors on their credit reports may struggle to obtain loans or credit. However, all is not lost. There are ways to improve your credit rating. In this article, we’ll tell you everything you need to know about credit repair so you can find the right ways to fix your situation.
What Is a Credit Score or Rating?
Your credit score is a number that reflects your personal financial history, including times you’ve defaulted on loads, applied for credit, or missed a bill payment. It is a score ranging between 0 and 1200. The higher the number, the better your position.
In Australia, your credit rating is usually calculated by Equifax, the country’s largest reporting credit bureau, and may be used by lenders looking to decide whether to approve your application for credit or give you a loan. It will also determine your interest rate on loans.
In July 2018, Australia introduced Comprehensive Credit Reporting (CCR), which disrupted the system that credit scores were no longer just based on negative actions, but positive attributes, such as the timely payment of bills, are now also listed on credit reports. This means that your credit score is now a more accurate picture of your spending and paying habits.
What Are the Dangers of a Bad Credit Score?
There are times in life when we need access to additional funding, whether it’s in the event of an emergency or when we want to make an investment for our future. When it comes to such things, most of us won’t necessarily have the savings to cover the costs, which is where lines of credit and loans can come in handy.
However, obtaining credit isn’t always easy. Lenders want to know that they will get their money back and that you won’t default on payments. Therefore, they’ll run a credit check on you. If the credit check reveals a poor credit rating, the lender will be reluctant to give you credit or a loan, which may hamper your plans.
While there are instances where lenders will still approve an applicant with a poor credit score, they will limit risk by offering you a loan with a higher interest rate making it more difficult for you to pay the loan off quickly.
Therefore, do yourself a favor, and ensure your credit rating is high!
The Dangers of Repairing Credit Scores the Wrong Way
As we mentioned earlier, having a poor credit rating doesn’t have to spell doom and gloom, especially thanks to changes made to the Australian reporting system back in 2018. Thankfully, there are ways to improve your credit score and reinstate your positive financial standing.
With that being said, however, there are several different ways of doing a credit clean up, with some avenues being more legitimate and safer than others.
Naturally, the world of credit ratings and debt consolidation may feel a bit overwhelming to the less financially savvy among us. So, it’s understandable that one may wish to hire a service to help them navigate the system and complete their credit fix.
Hiring a credit repair company certainly has its benefits. However, sometimes the convenience that these services provide comes at a price. It is important to be discerning when choosing a credit repair company to work with, as there are lots of unscrupulous actors in operation too. Working with a dodgy credit repair agency could put you into greater debt and make your credit score worse. Be mindful of those offering services that sound too good to be true, as the chances are they won’t be able to deliver on them.
How to Repair Credit the Right Way
So, let’s look at ways you can repair your credit the right way and make sure it works.
Know Your Credit Score
First things first, if you want to do a credit fix, you’ll need to begin by understanding the extent of the issue. Anyone who has ever applied for a credit card or loan will have a credit report, and you have the right to get a copy of yours once every three months at no cost. Even if you aren’t trying to repair your credit score, it is worth getting a copy of the report at least once a year. Therefore, you need access to your report.
You’ll find you can access your credit report online within a couple of days, although it could take up to 10 days if you want to receive a copy by email or post. To get hold of your free credit report, you can contact credit reporting services such as Experian, Illion, and Equifax.
Check Your Credit Information
Mistakes and errors are commonplace when dealing with administrative paperwork, and financial institutions are no exception. So, when you first receive your credit report, go through it with a fine-toothed comb. Keep an eye out for anything that doesn’t look quite right. From debts being reported twice to incorrect information about payments or more serious discrepancies that could be linked to identity theft, take note of anything that doesn’t make sense.
Analyzing your credit history requires time and effort, but it pays to be meticulous. Ensure that those overdue payments are listed correctly and confirm you’ve received information from creditors about unpaid debts.
Fix Any Discrepancies
To fix any discrepancies you’ve noted while going through your credit report, you’ll need to know to who to report the issues.
There are some errors that the credit reporting agency may have made. These include errors in your name, birth date, and address, debts being listed twice, or the amount of debt being incorrect. Once you report these things to the credit agency, they may be able to fix it straight away or help you get the information changed.
Then there may be some errors that may have been listed by the credit provider. For instance, the credit provider may have listed a default while you were during a dispute about it, or they may have failed to notify you about an unpaid debt. you’ll need to contact a specialist to negotiate with the credit provider and ask for the discrepancies to be removed. If the provider agrees they’ve made a mistake, they’ll contact the credit reporting agency to have it removed from your credit report. Now, if you are unable to reach an agreement with the credit provider, the next step will involve contacting the Australian Financial Complaints authority to get a free independent dispute resolution.
Review Your Budget and Credit Cards
Once you understand your financial situation, you can begin to take action to fix your credit rating. Remember that no matter what the extent of the situation, you won’t be able to fix your poor credit rating overnight. So, you will need to be prepared to commit to a long-term money management strategy.
The first thing you’ll need to act on is preventing your credit score from getting worse. So, start by drawing up a detailed budget. It should include all your essentials, such as rent, groceries, and utilities, as well as any regular debt payments you have in the form of loans or credit cards.
While you are working on money management, it is worth looking at your credit cards. Many people are misled into believing you need to have a credit card to build up a credit score, but in some cases, it can just cause problems by acting as a tempting source of easy cash for quick gratification. So, review your credit cards and take note of the limits and interests, as well as any rewards.
Look for opportunities to lower the limit on your credit card too. This will help you reduce the temptation to spend frivolously but still provide a financial safety net for emergencies.
Depending on your situation and the amount of debt you are in, you may want to simplify matters by considering debt consolidation. Alternatively, debt negotiation services are an option worth exploring if you find yourself in financial hardship or a perilous financial situation.
Find a Legitimate Credit Repair Service
While it is possible to try and fix any discrepancies on your credit report yourself, a convenient alternative would be to use a legitimate credit repair service. As previously mentioned, using a dodgy credit repair service may end up making the situation worse, so it is crucial to find a trustworthy agency to work with. Look for an agency with a strong track record for taking care of their client’s interests and getting them the results, they deserve.
Final Thoughts on Credit Repairs & Fixes
Coming to terms with debt is not much fun, but it’s something worth doing without further procrastination. The fastest way to repair your credit is to start today. As soon as you tackle your debts head-on and start working on improving your credit rating, the sooner you’ll be able to move on with your life and gain easier access to the sources of funding you need.
If you are looking for some support in tackling your credit report and repairing your credit score, we are here to help! We provide honest, upfront advice for a fixed fee, so you don’t need to stress about any nasty surprises. We understand that you are already working on getting your finances in order! Moreover, as a specialist law firm, we are adept at litigating on behalf of our clients when dealing with creditors and will go the extra mile to ensure your credit report is totally accurate.
So, what are you waiting for? Fix your credit rating today with Credit Repair Solicitors: the experts in fixing your financial standing!