Beat the bad credit blues
Do you think there’s something nasty lurking in your credit history? If you’re looking for a home loan, it might be time to clean up your file.
If you’re applying for a home loan, a bad credit history is the last thing you need. Unpaid bills can come back to haunt you and undesirable items in your file both raise a red flag with lenders and can mean you end up with a higher interest rate.
Your credit file outlines in detail all dealings and debt agreements you have entered into previously with credit providers. Because it is a comprehensive record, it pays to have paid all your bills.
While a bad credit history can mean big trouble for would-be borrowers, all is not necessarily lost since your credit faux pas, if you’ve committed one, will not be listed for all eternity.
All credit applications, accounts that have remained unpaid for more than 60 days and court judgements will only remain on your record for five years from the date they were listed.
Bankruptcies and more serious credit infringements, on the other hand, will linger for seven years once listed.
Before you even start sniffing at the home loan market, or look to refinance your current loan, get hold of a copy of your credit file from a credit reporting agency such as Veda Advantage, or Dun & Bradstreet.
Requesting a copy of your file won’t cost you a cent if you can wait around 10 working days, but if you need immediate access then you can expect to pay a fee.
Take action If you have a bad credit history, it is in your best interests as a borrower to ‘clear your credit conscience’.
Check all details have been logged correctly. If your name is spelled incorrectly, it may lead to someone else’s credit defaults appearing on your record.
Also check that debts have not been listed twice, that the amounts are correct, that missed repayments were overdue by at least 60 days and that paid defaults have, in fact, been listed as paid.
Make sure also that any old minor defaults or any serious credit infringements are not still listed.
If you do find any errors, you should contact the credit reporting agency to get them corrected.
Before challenging a listing, you should ensure you have collected copies of all your account statements relevant to the dispute as these may be called on as evidence when you make the claim.
Once you have made sure your file accurately reflects your history, it is time to start paying off outstanding credit defaults to pave the way for a brighter credit future.
Paying off overdue items and then having them transferred to the paid defaults section will not only improve your credit standing but also your standing with lenders.