Having a good credit history is absolutely critical to your chances of securing any form of credit such as a loan, credit cards and even utilities . It assures lenders that you are likely to pay your debt based on your past borrowing behaviour. To avoid being denied a loan, it is therefore important to know what can negatively affect your credit score.
Late Payment of Bills
Do you regularly pay your bills, such as phone and electricity, late? It’s a habit that may seem harmless, but the law allows any credit provider to report if you are more than 14 days late and this remains for two years on your report. If your outstanding debt is overdue by 60 days or more and is at least $150, the credit provider can report this as a default which stays on your report for five years. Once it shows up on your report, it counts against you.
High Number of Enquiries
Times can be hard, pushing you to make multiple loan enquiries. However, this can work against your score. This is because each application is added to your report, whether it is successful or not, and stays there for up to five years. Even if you are shopping around for the best interest rate and willingly decline offers, all of these applications will appear on your report. Multiple applications in a short space of time would therefore make lenders more cautious and reluctant to give you a loan, as it would indicate you’re in financial distress.
A Large Amount of Debt
Debts can pile up. If you have multiple loans and credit cards with large limits, this can negatively affect your ability to get new finance in the future. A lender would likely not approve your finance application in view of such debt. It is therefore advisable to reduce your debt to manageable levels, and this includes reducing card limits.
Reports to Bureaus
If you fail to meet your financial obligations, such as your mobile, electricity and car or furniture repayments, the aggrieved parties can report you to credit bureaus. In addition, any company which you could owe rent, medical bills or library fines, can also approach debt collection agencies to collect the debt on their behalf and list a default or court judgment against you. The cumulative result is a significant dent on your score.
Change of Address
When you have loan or utility obligations, it is important to notify your creditors as soon as you change your address. Failure to do this may negatively affect your score. This is especially important if you lived in a share house, as your former housemates may default. It is the client’s obligation to ensure that all credit providers have your most recent contact details, especially address and contact number.
As you may notice, you may actually be in control of most of these factors by being more vigilant. However, a credit repair service can always help you achieve a clear rating. Contact us here today and let us check, challenge, and clean your file.