What to do to improve credit rating?

A bad credit score can haunt you for up to seven years. That means a difficult time getting a mortgage, credit card, a car, or even a job. Thankfully, there are ways to help reduce or remove a tarnished credit record.

The first step is to request your credit file (free from the Office of the Australian Information Commissioner), and study it carefully. If there’s anything on there that doesn’t look right to you and is affecting your credit rating negatively, request an investigation into it.

The second step is to contact any lender, or company you are in contract with and request to pay your outstanding repayments. Your repayments will be reflected on your credit file within five days. While this may not affect your credit score immediately, it will provide you with the grounds to show that you are up to date and your financial situation has changed for the better.

If you’re having trouble making repayments, speak to your credit providers to see if they can provide you with some leniency in the form of smaller repayments or cancelling unnecessary contracts.

Get a calendar, or ask a responsible friend or relative to chase you up when you’re due to pay a bill, it’ll be easier than trying to remember it on your own.

If you can be approved for credit, use that to your advantage. If you can show that you are being approved for credit and meeting the repayments on time, that would put your credit file in a positive light when looking for larger credit applications later on. For example, if you don’t have a credit card and pay for everything out of your savings account, consider getting a credit card and putting all your bills and living expenses on it, and paying it back immediately. This means you haven’t really changed anything, but you’re proving you can handle credit responsibly.

Finally, seek the advice of a community-based financial counsellor if you’re having financial trouble or problems with your credit rating. They may be able to help you get back on your feet.

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