When you apply for a credit card or new loan, your credit rating is a key determining factor as to whether the bank or lender will approve your application. Many people who have a bad credit history aren’t even aware of their situation.
It’s in your best interests to find out your credit rating, and then do whatever you can to improve it. Here’s three steps you can follow to repair your bad credit and get in a better financial position, without having to spend a cent!
Step 1: Find Out Your Current Credit Rating
Your credit rating is calculated by each of the three Credit Reporting Bodies (CRBs) in Australia. They determine your score by taking a snapshot of your personal information, the types of loans or credit you have, the amount you have borrowed – and how much has not been repaid, the number of credit applications you have made, and any defaults or missed repayments, Debt Agreements or bankruptcies listed.
You can request a free copy of your credit report and rating once a year, from each of the CRBs via phone or online:
| Credit Reporting Body | Website | Phone Number |
|---|---|---|
| Equifax Australia (formerly known as Veda) | equifax.com.au | 1300 762 207 |
| Dun & Bradstreet | creditcheck.illion.com.au | 1300 734 806 |
| Experian | experian.com.au | 1300 783 684 |
You should receive your reports and scores within ten days of submitting your request.
Step 2: Check Your Reports
Much like a borrower’s report card, your credit file contains a range of personal, financial and credit information about you. When checking your reports, make sure that the records are accurate and nothing is listed twice. You will need to contact the CRB with any mistakes you find to have them corrected.
Step 3: Credit Repair Solutions
Here are some things you can do to repair your credit rating:
- Consider consolidating your debts. If you are struggling to keep up with multiple repayments across a number of loans, you can consolidate them into a single loan for easier repayments and to prevent default listings being added to your credit file.
- Pay all your bills on time. Paying utility providers such as your phone and electricity companies, on time, is just as important as making your loan repayments on time. Negotiate with lenders to repay or clear debts. A repayment plan can help prevent debts being listed as defaults on your credit file.
- Pay off your credit cards. Credit cards often have high interest rates, and are a big temptation for spenders, which can lead to a spiralling credit debt.
- Don’t apply for any new credit. Each time you apply for a new loan or credit card, a listing is made on your credit file. This can negatively affect your credit score.
- Get help (free financial advice) if you need it. If you don’t feel like you are able to fix your bad credit history alone, it’s a good idea to consider seeking financial help. However, don’t let this get you into more debt! There is free financial advice available.
Fixing a bad credit history can take time – months or even years. Following these steps will help keep you on track to halting bad credit behaviour and turn your financial situation around for a strong credit rating in the future.
It can be tricky to fix your credit rating completely by yourself. Be wary of credit report scams, and never respond to an unsolicited email offering you a free credit report. They are likely to be scams trying to trick you into giving out your personal information.
