How to fix your credit rating…

A lot of people have skeletons in their credit file. Quite often they don’t even know about the skeletons themselves – but they wonder why they keep getting declined for applications for credit cards and other credit applications.

Here’s how you can access your credit file, find out what’s wrong and patch it up.

Step 1 – Purchase your credit file

Purchase your credit file at My Credit File for $29.95. Your complete credit history will be sent to you the very next day.

Step 2 – Check for errors. Contact relevant creditors.

Creditors may have made an enquiry by accident. This can happen because someone else may have the same name or live at the same address, and the enquiry was listed against your name. Some credit providers will count enquiries against you when you apply for credit, so check your file carefully for enquiries you are not familiar with.

You may also have an accidental default on there. Defaults stay on your credit file for 7 years, so it’s important any incorrect default listing are removed. Any default on your credit file can affect applications for credit. Check carefully. If you see any default listed in error, do the following to have it removed.

• Call the creditor
• Quote the reference number on your credit file
• State your case – tell them why it is wrong
• Once it is fixed a confirmation letter will be sent

Though it is not your fault, it’s still YOUR responsibility to ensure your file is correct.

Step 3 – Once you are happy it’s correct, do you have any defaults there?

Defaults are really what holds you back when you’re applying for any kind of credit – anything from a small credit card to a big mortgage.

Step 4 – OK so your credit file is accurate. Now if you have paid defaults, make sure they are listed as PAID.

A paid default is where you have received a default due to late payments or no payments and you have made an arrangement and repaid it back in full. However even a paid default will stay on your credit file for 7 years. If it is set to paid, it looks far better to credit providers when they assess your application for credit. However many will still count this against you when you apply for credit.
To clean up these paid defaults you will need to:

• Call the creditor and get them to send you a document with the status of the default. If the status is discontinued, certified or struck out, that means you can have the default set to paid. If not, it means you still owe them some money.
• If it is one of the above three statuses just mail the document from your creditor to Veda at PO Box 964 North Sydney NSW 2059, with a letter stating you want it changed to paid.
• They will have it set to paid and send you a confirmation letter informing you.

Step 5 – Are there any genuinely unpaid defaults on your credit file?

You need to get these fixed as soon as possible and have their status changed to PAID. If you do not do this, you run the risk of attending court. You will also find it very difficult/impossible to get credit from most credit providers.

Here’s what you need to do:

• Call your creditor
• Be co-operative and business like about the matter
• Come up with a payment arrangement
• And stick to it.

Once paid, follow my instructions above to ensure the default is listed as PAID on your credit file. Get a document sent to you from your creditor confirming the PAID status, then forward it to Veda to be set to paid and double check.

Are you in a Part 9 Debt Agreement?

Part 9 Debt Agreements are reached via negotiating compromises with your creditors. Instead of being forced into bankruptcy when seriously in arrears, you can ask your creditors to agree to an affordable payment arrangement to settle your debts.

This will remain on your credit file for 7 years but is preferable to worse scenarios of bankruptcy or multiple unpaid defaults or court action. Make sure you consider your situation carefully before deciding to go into a Part 9 Debt Agreement or declaring yourself bankrupt, as you will have to live with the consequences for years to come.

Increase your chances of being approved for credit

Just to recap:

• An enquiry or default  error – follow the steps to fix this as soon as possible
• Make sure all defaults are set to paid – if they aren’t, then pay them
• Try to avoid getting into a Part 9 Debt Agreement or Bankruptcy

Hope this helped to clean the skeletons out of your credit file and improve your chances of having your credit applications approved.