Wondering how long it takes to repair credit? Whether you’re applying for a credit card or a home loan, bad credit often means the difference between acceptance and rejection.
Negative credit scores tell lenders that you might have trouble paying them back, even if you’re confident you can afford the repayments. However, it’s not all doom and gloom. Here are some great ways to start repairing your bad credit and take control of your finances again.
What Credit Repair Means
Put simply, credit repair is how you improve your credit rating so that your applications look more attractive to potential lenders. This means showing lenders that you can pay your loan debts on time, and that you’re reliable.
Credit repair doesn’t happen overnight, but there are straightforward steps you can take to start the process.
Your Credit History
Your credit history, or credit report, is a detailed record of all the times you borrow or lend money. The results of this report are collated to give you what’s known as a credit score, or rating.
It’s important to get familiar with what your credit rating is—you can’t fix your credit if you don’t know where the problems are, after all. There are a number of government-recommended Credit Reporting Bodies (CRBs) who will provide you with a free copy of your credit report, including Equifax (formerly Veda).
File errors
You don’t want your credit application to get rejected because of a silly administrative mistake. The first thing you’ll want to do when you obtain your report is go through it carefully and look for any errors. Common file errors include:
• Errors with your name, address, or personal details;
• Debt duplication;
• Debts wrongly under your name; and
• Inaccurate repayment details.
As soon as you spot a mistake in your history, report the error to the CRB who can remedy small errors. Otherwise, contact the credit provider.
This process can be complex, and lenders might dispute your position. Our specialists can help you through this.
Negative Listings
A poor repayment history, for example frequently defaulting on payments, can stay on your file for up to 5 years. More serious financial problems, such as bankruptcy and Debt Agreements, stay on your file for 7 years. It’s a good idea to wait until these “fall off” your report before applying for loans such as home loans.
Improving Your Credit History
Simple ways to improve your credit history include:
• Consolidation loans, which bring your debts together;
• Don’t apply for too much credit at the one time;
• Only take out what you can afford;
• Make your repayments on time going forward;
• Tell creditors if you’re struggling to make repayments, so that the debt doesn’t automatically become a default; and
• Always make sure you know your credit score and take action as appropriate.
Credit repair can take up to a year, or more, but the sooner you start, the better. Not sure where to begin? Our experienced team is waiting to help.
Debt Negotiators provide impartial and confidential financial consultations and debt consolidation advice. To speak with one of our specialists and start taking control of your finances again, contact us on 1300 351 008 or reach out to us online.
