5 ways to rebuild your bad credit from the ground up

Published on November 30th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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A bad credit mark can be out on your credit report if you are late in payments, defaulted on a payment, or even multiple credit enquiries. There are a few things that you can do to improve your credit score in order for it to stay out of the bad credit mark. Here are four ways that you can work towards building a good credit score as part of your new years resolutions.

Borrow what you can pay back

One quick way to tarnish your good credit report is not meeting repayments. At the beginning of 2017 Australians found themselves $7.5 billion deep in credit card debt. The worse thing you can do in this scenario is to get more credit, to pay off your card that you have accrued debt on. You will have to show lenders that you know how to avoid excessive debt, and when you borrow you can repay responsibly.

Pay your bills on time

Show that you can manage your finances by paying your debts on time, whether it be a credit card or a loan. If you fail to meet an overdue payment of more than $150 it can stay on your credit report for up to five years. This could be something that can hinder you from getting a car loan or a home loan in future. As much as we would all love bills to just disappear, you will have to pay attention to anything that is posted or email and make sure that you pay it off. An automatic payment will help you stay on top of things.

Keep your accounts active

Make sure that you build an active credit history through accounts and credit that you know you will be able to meet in terms of repayments. Having zero credit history does not reassure your lender that you are a responsible borrower. Avoid taking out loans or accounts to play keeping up with the Jones or the latest trend, but take it out to keep active with things that you need. You can start off small by taking out something like a mobile phone plan, gas or utility accounts that are registered in your name.

Try to fly under the radar with a clean listing

During the course of the year, you can take initiative to make sure that you don’t get any negative listing that can affect your credit history. These could be listings such as having:

  • Defaults on payments with accounts or loans. It’s advisable that you pay these on time.
  • Check your credit report for any problems such as misspellings or errors.
  • Avoid situations that will result in you having writs, judgements or becoming bankrupt. These stay on your file for quite some time and can affect future loans or accounts you would want to get.

The take home is that you know what you can afford and how much you want to borrow. Keep constants tabs on payments that need to be made in order to keep afloat. If it’s possible, pay more than what is required, so when those months come where money is too tight to mention you would be able to go back to minimum repayments.

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Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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