How Can You Repair Your Credit History?

Written by on December 26, 2012 in Money - No comments | Print this page

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debtproblemsYour credit score is an important number for determining how much money you can borrow and what interest rates you will be charged.

Credit scores are essential for people who are looking to take out a loan in order to make a large purchase, such as buying a home. Unfortunately, many people end up with low credit scores due to minor oversights, such as forgetting to pay a bill on time.

Obtaining a credit report

The first thing you should do is obtain a full copy of your credit score. In order to obtain a credit report you can contact one of the two chief reporting agencies in Australia, Veda Advantage or Dun and Bradstreet and request a copy of your report. Usually, these reports are provided free of charge. This report will contain a list of items regarding your financial management, such as your bills and how many of them remain unpaid.

With the report in hand you should go through, line by line, and see what things are affecting your credit report. Unpaid bills, late payments, and simply having too much debt compared to your earnings will all lower your credit score.

Identifying the issues

Using your credit report you will be able to identify problem areas. For example, a common mistake people make is opening a credit card and making a small charge but then forgetting to pay it off. Maybe you took advantage of a 20 percent off promotion at your favorite retailer that required you to open up a store brand credit card. You made a small charge on the credit card but then forgot to pay it off. In this case, if you review your credit report you will see this unpaid bill and will know that you need to pay it.

You need to analyze your credit score and figure out what areas are hurting your credit. You then need to look for individual solutions to each problem. For example, if your credit score is being hurt because you have a tendency to forget to pay your bills, is there a way to set up automatic payments? This will help make sure that every bill gets paid on time.

If you have too much debt you will have to look into ways to reduce your debt. Perhaps you can use part of your savings to pay down your credit card bills or part of your mortgage? If debt is becoming an issue then you should try to purchase more goods and products with cash you have on hand. Bad credit loans are given to individuals whose credit record is not favourable. Some lenders even supply unsecured bad credit loans where no asset is required.

Look out for mistakes

Another important thing is to make sure that there are no mistakes on your credit report. Sometimes, credit reporting companies accidentally confuse someone else’s debt or credit history with yours. For example, if there is another person with the same name who lives nearby, the credit reporting agency may confuse that person with you. So if that person has failed to pay their credit card bill you could be unjustly punished because the credit report agency thinks it’s you who is failing to pay their bill.

If you find a mistake on your credit report you can contact the rating agency and dispute the item on your report. This letter should clearly state which item you are disputing and why. When and where possible you should include evidence of why this item is a mistake.

This is a guest post.  This article has been contributed by John Smith. John is a full time blogger with a passion for everything finance.

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