Your credit score is one of the factors that banks and lenders check when you send them an application for loans, credit cards or other financial products. The higher your credit score, the easier it is for lenders to trust you with a loan. The sad part here is that not everyone with low credit scores is irresponsible or unreliable– some are victims of circumstance, while some are victims of errors on credit reports.
Regardless if you’re a victim of your circumstances or erroneous credit reports, there are ways to improve your credit scores.
Fixing Your Credit Score Due to Erroneous Credit Reports
Since your credit score will definitely affect any application for loans or credit cards that you have, you need to determine the reason for your low score. If you are certain that you did not poorly handle any of your financial responsibilities, then it’s time to check your credit reports for errors. You have the option to hire professionals or do this yourself.
Keep in mind that even professionals can only remove the incorrect information on your credit report. If the negative reports are true, even professionals can’t help you remove them.
Credit Score Repair: Things That Are Not Your Fault
Sometimes your experience is a result of someone else’s activities. There are cases where you’ve done everything you can to maintain a decent or high credit score, but somehow you still end up with decreasing numbers. This scenario may be a result of an error in your credit report.
As mentioned previously, you have the option to hire professionals to check and clean up your credit reports from errors, but you can also do it yourself. Here are the things that you can fix yourself for FREE:
Credit Reporting Agency Errors
Even reliable credit reporting agencies can make mistakes. After all, to err is human. If you suspect or if you are certain that a credit reporting agency encoded or added incorrect information to your credit report, you should contact the agency to ask them to rectify the error.
Some of the information you should check includes the following:
- Date of birth
- Duplicate records of debts
- Amount of debt
Credit Provider Errors
There are cases where the credit providers are the ones who made an error in recording your information. Much like with credit reporting agencies, you need to contact the credit provider and inform them about the error. If they confirm that they made a mistake, they will ask the credit reporting agency to remove the information from your credit report.
Here are some of the things that your credit provider could have done incorrectly:
- Reported your repayment due date wrong. For instance, noting that your repayment is overdue by 60 days when it’s not.
- Missed their responsibility of notifying you regarding an unpaid debt.
- Reported a disputed debt or repayment as default.
- Failed to update changes to the payment plan or contract terms.
- Created an account due to identity theft or by mistake.
Correcting your records will help improve your credit score and lead to easier fast loan or credit card applications.
In case there are issues with reaching an agreement with your credit provider, you can contact the Australian Financial Complaints Authority (AFCA) to make a complaint.
Credit Score Repair: Things That You Can Fix
If you see your low credit score and say That makes sense or It can’t be helped, then you are admitting to yourself that it isn’t due to any credit provider or credit reporting agency errors. As mentioned above, a low credit score is not always a reflection of a person’s reliability or sense of responsibility.
Regardless of how you got your low credit score, if it’s not a reporting error, then it is something your need to fix on your own.
Here are some things that you can do to improve your credit score:
- Limit your applications for loans. The more loans you apply for at the same time, the worse it looks.
- Pay your rent on time.
- Pay your mortgages, loans and credit card bills on time.
- Pay your utility bills on time.
To learn more about improving your credit score, you can check this smart financing guide.
Be proactive when it comes to managing your credit score. Determine whether you need a change in habits or if you need someone to correct anything on your credit report. Loans are helpful during your times of need, it would be a shame if your credit score will get in the way.
The opinions expressed in the Blog are for general informational and entertainment purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific investment product. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice.