You may have fallen into financial disaster; however it is always possible to rebuild your credit standing. Millions of Australian’s end up with bad credit, whether it be bankruptcy, late payments on bills, or foreclosure. Here are some tips on how to best rebuild that positive credit rating again.
Review your budget
The importance of knowing how much income is coming in and how much is going out on spending, fixed and variable expenses is vital. These might be mortgage repayments, car or loan payments, or utilities and phone bills. Once you have a clear picture of your financial situation you will be able to make the subsequent changes to rebuild you credit standing.
After you have done this you will need to identify what your financial priorities are and how you will achieve them.
Get a copy of your credit report
Information is vital to know where you are standing with your credit before you work with creditors and make financial decisions. You can obtain a copy of your credit report from Veda Advantage. You will need to review it carefully, if you spot any errors make sure you contact the agencies in writing (and keep copies) asking them to investigate the issue and make corrections.
Contact your lender
If you are facing financial hardship, it is best to let your lenders know when you hit the financial trouble spots such as job loss or medical emergency. It will help them stay current on your accounts and they may help you to keep good faith with them and possibly agree upon payment plans which are manageable. This will also help to improve your account status.
Pay your bills on time
Credit reports show your payment habits on all types of bills, not just credit cards. To improve your credit standing make sure you pay bills such as utilities, rent, doctors’ bills, or mortgages on time. And when you do so, keep a record such as receipts in case you need to prove your timely payments.
Stay at work
If you have job stability it is a good sign to lenders that you have the ability to pay off a loan. However if your resume is a little bit long it may deter lenders confidence away from giving you the loan you need. Staying at a job for about two years will show them that they can be confident in your income flow.
Don’t overuse credit
Once you start to work on repaying your existing debt, make sure you use your existing credit cards and loans wisely. Make your payments on time, avoid going over your limit, and pay the balances in full or try to pay more than the minimum due each month or billing period.
If you do not have a credit card, you may want to consider applying for a new account. But only do so after you have consistently stuck to your allocated budget for several months so you know you will be in control of the spending, perhaps only use it for budgeted expenses such as fuel or groceries. This will help you rebuild a credit history with lenders.
By showing lenders you can manage the credit account, it will be reported and in turn you will show up a much lower credit risk to credit bureaus.
Choose the right help
You can help to rebuild credit on your own and it can also be great to have help. However, be careful if you enlist help of a ‘credit repair clinic’ as these do not always deliver on their promises on fixing your credit and it is important to make sure you do research and trust the company you choose to help with your debt agreements.
If you have suffered the past year or so then you are definitely not alone. It is possible to rebuild a good credit rating with the right plan. If you need any help with debt please contact Life After and we are happy to prove to you that there really is life after debt, your first consultation is always free.
Source: Yahoo Finance