Minimising your Bad Credit History to obtain new credit

There are multiple strategies for minimising the effect a less than perfect credit history can have on your ability to obtain loans. We’ll look at the practical easy measures you can take in just a moment but first let me state the basic premise that all your efforts should centre upon:

Be as pro-active as possible in making sure you do not leave a bad credit trail in the first place.

Now you might think that all sounds great, but how do I do this if I can’t meet my financial obligations? Well here’s how.

  • Always update your contact details with billers

Unfortunately you’ll have exactly the same black mark placed against your file if you cannot be contacted to pay a bill you are capable of settling, as for one you cannot settle. In the eyes of the law and the financial industry it’s the same.

  • Do not ignore bill reminder notices

Put your emotions, and pride aside, and respond. Companies just want to know they will get paid, often not immediately, but in a reasonable time frame.  You’ll find can negotiate a payment plan and even negotiate on the interest charged.

  • If you are refusing to pay a bill

On a matter of principle, don’t just ignore the company billing you. Communicate clearly with them why you don’t agree with the charges, then contact a relevant government body, ombudsman or Consumer Affairs and escalate the matter through proper channels.

  • Seek legal advice

Most people are wary of doing this as they see it as an added expense. Truth is in the long run it can end up being a fraction of the cost the dispute might otherwise end up costing you. Especially if you are convinced you are in the right or are being bullied by a large company.

Now if despite taking these measures you still have some black marks against your credit history you will find you can still obtain credit, there are just a few more guidelines you’d have to meet.

  • Lenders may require all outstanding bills to be finalised with your creditors before they take you on

That’s just common sense, they want to know that your income funds can be put against the new debt, not used to try and pay off old ones.

Most lenders have an “allowable cap” of defaulted amounts, but often this is no more than $500.

You may have to work with a non-traditional lender and higher interest rates may apply.

One thing that not many people are aware of is just how long their black marks remain on their credit history, here are some examples.

  • Court writs and summons : 4 years
  • Payment defaults: 4 years
  • Court judgements: 4 years
  • Credit enquiries: 4 years
  • Bankruptcy: 7 years
  • Part 9 debt agreements and clear-outs: 7 years
  • External administration and previous Directorships: 7 years

Now here’s the good part

At Rate Detective we have a whole team of experts who, even if you don’t, know all your rights, and your obligations.

Whether you’re seeking credit for your business or as an individual we can help you navigate the difficult waters of a bad credit history.

Remember the trick, as I mentioned earlier, is to put your emotions aside think clearly and work through a logical process towards the outcome you desire.

That process can start right now with one of our helpful, non-judgemental Rate Detective consultants. Call or email us today if you like and we’ll get you on track in an easy and professional manner.

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Published on July 7-th, 2014 in Home Loans
Damon Rasheed is the CEO of Rate Detective, an Australian financial service comparison sites specialising in Life Insurance, Income Protection Insurance and home loans. Damon holds a Master's Degree in Economics from the University of Melbourne and has been involved in many start-up internet businesses.

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