5 Steps To Preventing, Fixing and Managing Your Credit Rating

Many Australians face difficulties in securing credit due to a poor credit rating. Positive Lending Solutions offers simple car loans and other financial products. Director of Positive Lending Solutions Tom Caesar suggests five simple steps to help improve your credit rating.

Step 1 – Obtain A Credit Report

It’s hard to find a solution without understanding the problem. A credit report can be obtained from My Credit File and will highlight not only your credit score but the key factors working against you. The cost is $69.95 and is an excellent starting point in fixing your credit problems.

Step 2 – Remove Any Defaults

Defaults are one of the worst things to have in your credit report, but often they are listed by mistake or may even be the wrong person’s default. There are companies that can help you remove these mistaken defaults from your credit report at a cost of up to $1,500, or you can contact the relevant creditors directly to have it removed.

If you believe there is an error on your credit report you can have it corrected for free by either contacting the credit provider or credit reporting body, Veda. Veda’s corrections process is outlined at http://www.mycreditfile.com.au/corrections/.

According to Veda, a default cannot be removed from a credit report unless it is an error. If a payment is made on a default, its status will be updated to paid, settled or current and will remain on the credit report for a period of 5 years.

Step 3 – Remove Any Outstanding Court Judgements

This can actually be easier than removing a default from your credit history, as long as the case is still pending and the outcome has not been settled. If the court case has been finalised, you will need a ‘letter of discontinuance’. You can get this from the creditors of the party with whom you have the dispute, confirming settlement has been made. This is then provided to a magistrates’ or local court.

Once you visit the court, you are required to complete and lodge a statutory declaration. Finally, you must contact Veda. Once notified of a discontinuance Veda will update the court judgement on your credit file to reflect this. However, Veda says the court judgement will not be deleted from an individual’s credit report. It is also important to note that if you pay or settle all of your judgments do not assume that the Court or the credit provider will notify Veda of this fact. Instead provide Veda with evidence of this.

Step 4 – Start Budgeting And Saving

Following the right patterns when it comes to your financial management will improve your credit rating over time.

Make sure you:

• Pay your credit card bills on time
• Pay all bills on time
• Avoid new debt
• Keep your bank accounts open (even if they have a minimal balance)

Step 5 –Make Sure You Have The Right Insurance

Most people have home insurance, but it is a fact that for every one house lost to fire, another 45 are lost due to home loan payment defaults (usually a result of illness). It is critical to ‘stress test’ your financial situation for different scenarios which may lead you to consider:

• Income Protection
• Life Insurance
• Total and Permanent Disability Insurance (TPD)

These are often overlooked but should be seriously considered by any Australian.