It is no secret that in our modern age many people are struggling with credit.
It has been reported that 40% of Australians had paid bills late in the past 12 months. Electricity, mobile phone and home phone bills were the most likely to be paid late. (Research by Dun & Bradstreet May 2010).
Currently we are seeing lots of people running into trouble with their credit rating and the trouble sticks for 5 -7 years
You could be forgiven for thinking that credit is the enemy…
But MY CRA believes we need to develop the ethos that credit is not something that is granted, it is something that is earned. At one point banks were practically throwing money at us. Now it’s tough and you have to prove yourself.
There is absolutely nothing wrong with using credit provided you make it work for you. In fact, not having a credit rating in this day and age can be just as difficult as having a bad credit rating.
Where people come unstuck with credit is getting to a stage where they are forever chasing their tail with repayments, falling behind. Or getting blasé about repayments and not realising the consequences.
Credit can be wonderful provided you maximise it to suit you. If you can’t afford it now you can have the privilege of paying for it later – but understand that you will pay at some point.
Payments on any bills which are more than 60 days late can be listed as a default on your credit file.
This default can remain on your credit rating for 5 years, and can be very detrimental to your ability to gain further credit. Even if the account was later paid, the credit reporting agency generally does not remove the default but can mark it as paid.
Even defaults that show up as being paid can be enough for a decline on home loan approval in the future. It is extremely important to keep a clear credit file because the repercussions will be felt for 5 years.
There is no time like the present to start making credit work for you.
Begin by checking your credit file – which you are entitled to do for free. Visit www.mycreditfile.com.au to be sent a copy of your credit report.
If you find a default, writ or judgement on your credit file which you believe is there unfairly, unjustly or just shouldn’t be there at all – MY CRA may be able to remove it. We have had up to a a 91.7% success rate for cases we’ve take on. Most cases have a clearance rate of around 21 working days, with some tough cases taking a little longer. (more info on timeframes..)
Then the key is to establish a good track record on your credit file.
Here are some tips:
DO USE CREDIT: Having no credit history means there is nothing to calculate and the risk appears high to lenders. Start by borrowing something small. Repaying mobile phone plans, internet accounts, or store credit on time will appeal to anyone checking your credit score. Smaller purchases paid correctly contribute to approval for larger loans such as homes, vehicles and businesses in the future because they show a person’s ability to repay.
MAKE REPAYMENTS ON TIME: Repay any bills received by the due date. Repay over the minimum amount required on credit cards. If you are having trouble paying on time, contact the creditor as they may be able to work out a payment plan rather than listing the non payment as a default.
HAVE A STABLE ADDRESS: Lenders like to see stability. Furthermore, defaults are easy to come by when bills are sent to the wrong address. If you do travel frequently, consider a trusted family member’s address for all bills.
APPLY FOR CREDIT WITH CARE: You should only apply for credit if you feel you have a very good chance of being approved. Declined credit applications on a person’s file can hinder their chances of obtaining a loan. Likewise, you should only apply for credit you have full intention of pursuing. Every application is noted but does not stipulate whether it was approved or not. If you go shopping for credit and apply everywhere – it may look like you were declined everywhere.
CHECK CREDIT FILE REGULARLY: You should check your file before you need to apply for credit. That way if there are any problems you can sort it out while there is no urgency, and save yourself embarrassment and disappointment from having credit declined.
DON’T LEAVE DEFAULTS TOO LATE: If there are defaults, don’t put up with them for 5 years. People can check with a credit file repairer if they can be removed.
Please Note: Our previous results of up to 91.7% have applied only to consumer applications and past results are no indication of future performance