Repair Your Credit Report With These 5 Steps 

Have you been concerned about your credit file not being as healthy as it should be? Did you spend more than you wanted at Christmas or are you finding balancing your finances harder after a tough 2023? The fact is a poor or lower credit rating can impact your future borrowing or mean you are charged higher interest rates for any new lending. If your credit file needs some repair, here are 5 steps you can take to help that situation and get back on track. 

1. Know your credit score

Without a clear idea of your current credit score, it’s hard to know how far away you are from a perfect credit rating. So your first step is to check your credit score with a free copy of your credit report. 

In Australia, three main credit reporting agencies collect information from credit providers like banks, credit unions, store credit issuers, and payday lenders – including phone and utility providers. You can apply to any one of these credit reporting bureaus for a free copy of your credit report and credit score.

2. Fix any errors

Your credit score is calculated based on your credit history: how much debt you have, how well you repay your debt, and the number and type of credit accounts you hold. Lenders use this information to determine if you qualify for further lending. 

Regularly checking your credit report will help you identify any discrepancies. If you do find an error on your credit report – a default on a payment that you know you paid in full, or a credit application you did not apply for – it’s important you contact the credit reporting bureau to have the matter investigated and the error removed from your credit report.

3. Check any money still owing

Also, check your credit report for any late payments you missed. Lenders can report as defaults any late payments of $150 or more that are more than 60 days overdue. These defaults can stay on your credit report for up to five years, which is why it’s so important you do all possible to avoid late or missed repayments in the first place. Consider setting up automatic payments so nothing gets missed.

4. Pay your bills in full and on time

While minimizing further issues, it is vital to repair your credit score and build up your credit score with a good repayment history. In Australia, both positive and negative credit history is reported on and is used to calculate your credit score. By paying back your debt in full and on time, you’ll help improve your credit score over time.

5. Use your credit wisely

Applying for credit and paying it back on time helps improve your credit score over time. However, applying too often or for too many credit accounts in a short space of time can negatively impact your credit score. The key is to only apply for credit when you need it most and to pay careful attention to the type of credit you’re using. Certain types of loans – like quick cash or payday loans – negatively impact your credit score, so it’s a good idea to check before you apply for this type of lending. 

Fix your credit score 

Typically, lenders assess those with a lower credit score as a higher risk, and they may be reluctant to approve finance. Or they could charge a higher interest rate. Maintaining a good credit score is vital to ensuring you can access good credit when you need it. Like when it comes to applying for a mortgage.

To find out more about applying for mortgage finance – no matter what your credit score is – get in touch with Lending Connections. With access to a panel of lenders, we’re experienced at finding the right finance solutions for our customers.