If you are looking at applying for any type of credit be it credit card, home loan, personal loan, business loan or car loan your credit file is an important consideration by the lender. In fact your credit file is one of the top questions you will be asked about.
So how do you get a bad credit rating or a blemished credit report? It is surprisingly easy and the way to avoid a bad credit file is just as easy. Following the following tips will see you maintain a good clean credit rating and be seen as a favourable borrower by lenders.
- Don’t shop around for credit. Every time you fill in an application form online or at a financial institution for any type of loan you are giving the lender permission to check your credit file. When the lender checks your credit file they are obligated to list on your file that you are applying for a loan. This will stay on your credit report regardless of whether you obtain the loan or not. To avoid this happening do your research 1st by reading all the information the lender provides, making phone calls to the potential lender or use a broker who will do this for you. So rule of thumb is if the form you are about to fill in does not say that it will not effect your credit file do not fill it in.So why does this effect your ability to get a loan? The more inquiries you have on file the more it says to potential lenders that you are not being successful in obtaining finance and flags you as a risk. To ensure you get the right advice you need to speak to a broker or lending expert. If you do want to do it yourself do not make more than 2 or 3 inquiries in a 3 month period.
- Avoid obtaining small loans on a regular basis from a Payday Lender. Payday lenders are there as a lender of very last resort. If you use these lenders on a regular basis when you wish to borrow a larger amount of money the lender will be suspicious of your ability to manage your finances. Some lenders will ask you to justify your position. It is not a show-stopper but you do need to be aware of how it may be perceived by a lender. If you are unsure speak to your broker or a loans adviser.
- Not paying your bills or credit card could be classified as an unpaid default and be marked on on your credit file.It is extremely important to understand that if you cannot make minimum payments on your credit card or you are suffering financial hardship with your bills or other loans you speak to the company or lender and come to some arrangement for payment.You need to make a payment arrangement for your bills before you receive a default notice in the mail. However if you do receive a default notice it is your last chance to ensure you do not have a default marked on your credit file. Failure at the point of default notice to do this will surely mean a mark on your credit file.
The most common reason why people ignore the constant reminders for payment is they are embarrassed. However, companies are keen to assist you and ensure that your obligations are met. You need to call and make a payment arrangement and keep to that arrangement to avoid unpaid defaults being listed on your credit file.
- If you have unpaid defaults on your credit file you are still obligated to pay them. By paying your defaults they will be marked a paid defaults on your credit file and can improve your ability to borrow as a lender can see you did meet your obligation.
- Avoid where-ever possible declaring bankruptcy. Bankruptcy is an option of last resort and can debilitate your ability to obtain credit even more than if you have defaults on your file. If you are suffering financial hardship you need to speak to a professional or your lending institution. If you are struggling to pay loan debts there are many ways a broker or a lending adviser can assist. Often for loans it is a case of consolidation at a lower interest rate that is more affordable. The most important thing is you make bankruptcy your absolute last resort. Once you are declared bankrupt there is very limited options for obtaining personal finance, almost no chance of obtaining a credit card and if you wish to borrow for a car or a house your interest rate will be significantly higher than the standard rate.
The best thing you can do is if you are unsure of your credit rating is obtain a Veda credit report. Once you have got a copy of your Veda credit report speak to your broker or loans adviser and send them a copy of your report if you have defaults or bankruptcies marked on it. They will advise you the best way to go with your lending needs.
Remember do not be embarrassed about your situation. Everybody wants to assist you in keeping a good clean credit file. Following the above guidelines will assist you but if you have a question just pick up the phone and ask.
Katherine Quirke is a Professional Loans Consultant for One Stop Loans Store in Australia. Her professional services assist individuals, families and businesses with their lending financial needs. In every instance Katherine works closely with her clients to put them in a better financial position. Every situation is assessed for a positive outcome no matter how complex. Visit www.onestoploans.com.au for more information.