What is credit repair?
Credit repair refers to the process of improving one’s credit score by the removal of disputable, unfair, or contestable listings from credit reports. So why is it so important to fix your bad credit?
- When you apply for a home loan your credit report is almost always checked by the lender.
- Your credit report is basically a history of your financial activity in the past and is one of the main factors in determining whether your application for a loan will even be considered by the banks!
- The lenders’ policies have become stricter which means that even the smallest credit issue can be the difference between an approval and a decline.
If you fix your credit file prior to applying for a home loan then the lender will not be aware about the credit issues that you have had in the past and will approve your loan application as if you have clear credit.
Please enquire online to find out more on how credit repair can increase your chances in getting finance approval.
What are credit repair services?
Credit providers have an obligation to make sure that the correct process is followed when they record bad credit on one’s credit file.
However, some credit providers are very quick when it comes to listing a default and are extremely slow in updating the listing as paid if the account is rectified.
Therefore you should fix any black marks that are listed on your credit file through a credit repair service.
There are credit repair experts that can help you clean your credit file so that you can be eligible for a home loan.
Beware when choosing a credit repairer
There has been a rise in unregulated debt management services so keep your eyes open, particularly for services that claim to clean your file for free.
Firstly, you may be able to complete most of what these services charge for, by yourself.
Secondly, there is no quick fix: correcting legitimate errors or improving your repayment history will take time to reflect in a stronger credit file.
Maeanwhile, fees for credit repair services can range from anywhere between $100 and more than $1,000.
A credit repair service could actually make your financial situation worse particularly if you’re currently struggling with repayments on credit facilities or bills.
Fear is what some of these credit repair companies feed off so:
- Read their customer reviews.
- Search the company’s name on the Australian Securities and Investments Commission (ASIC) to find out whether they have been fined or banned.
- Call the National Debt Helpline on 1800 007 007 or another reputable financial counselling service.
- Contact a reputable community legal service provider.
The fact is, there is nothing that a credit repairer can do that you can’t.
How can credit repair improve my credit rating?
Credit scores are drastically reduced by the black marks on your credit file. By removing these when you apply for a loan, your credit rating will score higher. There are many reasons why you should choose to improve your credit rating when applying for a loan, the most common being:
- You will get a lower interest rate on a new loan and credit card.
- You have a higher chance of getting an instant loan approval by the banks.
- Your overall repayments will be reduced.
- The upfront and ongoing fees and charges by the lender will be reduced.
- The accuracy of your personal information will be improved.
Please enquire online for more information on how you can improve your credit rating.
How can credit repair help me apply for a loan?
If you get your credit file fixed prior to applying for a home loan then the lender are unaware about the problems that you have faced in the past.
This means that they will assess your loan application as if you have clear credit which would most likely result in an approval for your loan.
Should I refinance my home or repair my credit file?
It is always difficult to decide as to whether you should refinance your home or repair your credit file, as it could work both ways. Generally it is best to refinance your home if you have significant equity as the loan will be relatively cheap.
If you however do not have equity in your home then it is best to repair your credit file before applying for a loan.
What can be removed from my credit file?
Any unfair, disputable and contestable information can be removed from your credit file to increase your chances of getting an approval for a loan. Information that can be removed from your credit report includes:
- Overdue accounts
- Defaults
- Court listings
- Judgments
- Clearouts
- Crossed or linked files
- Multiple identities
- And many more
Once you get these black marks removed from your credit file then your credit score will improve which would make it easier for you to apply for a home loan and to get it approved.
What are the causes of bad credit?
There are many reasons as to why creditors mark a negative listing on your credit file, some of the most common being:
- Missed / Late payments on your bills.
- Inability to pay due to loss of employment, divorce, illness, and one off events.
- Disputes with credit providers.
- Identity theft.
- Lender mistakes.
However, you will be surprised to know that a number of defaults and judgments are listed incorrectly because the required steps were not followed or the details of the default are incorrect.
Therefore you should be aware of what is recorded in your credit file and seek professional help to remove any mistakes there may be.