7 steps to fix bad credit history: A home buyer’s guide
Buying a home can be nerve-wracking. There’s the deposit – have I saved enough? There’s your income – do I earn enough? There’s the home – have I paid the right price?
When all of these factors combine to give you, on the face of it, a good chance of approval for finance then there’s the issue of choosing the right home loan, at the right rate, with the right factors for your future. So you go through all of these sometimes stressful aspects of property buying, and you make the official application for finance with your chosen lender. It all looks good…
Until you are slapped in the face with an APPLICATION DECLINED. You should qualify for a home loan, but you don’t because your credit report shows up with a default.
You have no idea what the default is for – you always pay your bills on time – but that little default from what looks like a utility company, is messing with your future. How can they refuse me a home loan based on this, you ask?
Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs, says this is a scenario which frequently sees many Australians denied a home loan.
“A default will impact your ability to obtain credit generally for the entire time it is listed on your credit file – which is 5 years. So – for 5 years you will have a hard time getting credit anywhere, from mortgages to car loans to credit cards and even mobile phone plans,” Mr Doessel says.
He says people who find themselves the bearer of bad credit have two options. They can wait for 5 years, or they can investigate the validity of the listing.
“Mistakes can and do happen. Mistakes in credit reporting are most times only picked up by the credit file holder, so if you think there is something amiss with your credit file it is up to you to put it right,” he says.
7 Steps to Fixing Your Bad Credit History
1. Determine what account the default is for.
If you don’t have a copy of your credit report, you will need to order one. If you haven’t ordered a copy in the last 12 months, it will be free from the credit reporting agencies in Australia. They are Veda Advantage, Dun & Bradstreet, and Tasmanian Collection Service (if in Tasmania). You may have listings with one or all of these credit reporting agencies. They will take 10 working days to send you a copy of your report. For a fee you can have one sent to you urgently.
On your credit file, will be the company the default is with, and an account number. This should correspond with an account you have with them. If it doesn’t, or if you don’t have any accounts with the company in question, there is a good chance there may be a mistake on your credit file.
2. Gather all your information first, and try and determine how the default made its way to your credit file.
3. Before you call the company in question, sort out what you know about the situation.
Have they made a mistake? How have they made it?
4. Write to the Creditor to ask for information on the account.
You may need to find out more about how the default got there. Every company keeps a record of its customers and you can write to them and request your account records to date.
5. Decide on how you’re going to tackle them.
Now you want to try and negotiate for the Creditor to remove your default. Don’t go in guns blazing – bear in mind, there is nothing to say they have to remove the default. What you want to do is encourage them to do the right thing by you.
6. It is going to be hard going.
Most people find it really hard to correct their credit listing themselves –especially if it’s complicated. For one, the Creditor has to comply with a whole heap of legislation that crosses different codes, and if you don’t know legally where they may have made errors – it’s pretty hard to persuade them they have done the wrong thing. And also it’s taking the time to get to know it. Secondly, negotiating anything on your own behalf can be tricky – the old foot in the mouth routine can get you into trouble and see you stuck with the listing for the whole term. In reality, many people trying to fix their own credit rating get told they can have the listing marked as paid, but it is never removed. This is not enough to guarantee you the home loan. If you were able to show cause as to why the listing was put on your credit file unlawfully, there is a chance it will actually be removed.
7. Consider getting a professional on board. For a pain-free approach – at any time, you can hire the services of a credit repair professional. Most of them will look after getting a free copy of your credit file for you, order your documents from the Creditor as well as directly negotiate with them to remove your bad credit, based on the relevant legislation applicable to your case. And most importantly, they will probably think of things you had never thought of to strengthen your case for the default removal. This is your best chance at getting the listing removed completely from your credit file, which will allow you to apply for finance with a mainstream lender again.
Mr Doessel says credit repair is not suitably for everyone, and sometimes if people have ‘done the crime’, they may need to do the time. He says if you are a serial offender for late payments, or if you are currently struggling to keep your head above water, then new credit- especially major credit such as a mortgage- is NOT going to make it all better.
“But if you have been unfairly treated, or there has been a mistake on your credit file, then you have a right to insist on that inconsistent listing to be removed or corrected,” he says.
Graham Doessel – Founder and CEO MyCRA Credit Rating Repairs Ph 3124 7133
Lisa Brewster – Media Relations MyCRA Credit Rating Repairs Mob: 0450 554 007 firstname.lastname@example.org
Ph 07 3124 7133 www.mycra.com.au www.mycra.com.au/blog 246 Stafford Rd, STAFFORD Qld
MyCRA Credit Rating Repairs is Australia’s leader in credit rating repairs. We permanently remove defaults from credit files.
Some reports suggest there may be 14% of Australians with adverse listings on their credit file. http://www.savingsguide.com.au/how-do-i-check-my-credit-file-for-a-bad-credit-rating/
It is not known for sure how many of the over 16 million credit files in Australia could contain errors or inconsistencies.