Do you usually max out your credit card?
Bad credit has the potential to stop you from getting credit, purchasing a new car, or applying for loans. However, there are ways for you to improve your credit score one step at a time.
Fortunately, you have the option to apply for bad credit loans from Finance One to serve your immediate goals.
What is Bad Credit?
Bad credit is when your credit score falls under 550 on a scale of 300 to 850. Anything over 700 is considered a good score.
A credit report is essentially the financial history of an individual. Financial institutions refer to this report to calculate the risk if they make you a borrower. The risk level is in the form of your credit score. Higher the score, the lesser the risk.
A low credit score can prevent you from getting more credit. Lenders will tend to turn you down.
Factors that May Affect your Credit Score
Missing Loan Repayments
Missing loans or credit repayments have the potential to cause an impact on credit scores. All credit card payments you make remain recorded in your credit report for 2 years. Meanwhile, any default on these payments remains recorded for 5 years.
Late Bill Payments
It cannot be stressed enough about how important it is to pay bills on time. Telecom and electricity providers are permitted to share information if you default on their payments.
Multiple Credit Applications
If you apply for credit to various credit providers around the same time, it can adversely affect your credit score. Every time you apply for credit, an enquiry is recorded in your report. Such enquiries stay in the record for 5 years. Multiple enquiries in your record within a short span mark you as a potential risk for credit providers.
Frequent Balance Transfer Applications
Every application for a credit card coupled with a balance transfer adds to your individual credit report. Attempting to shift your credit card balance adversely impacts your credit score. It is always wise to pay off the credit card balance instead of transferring it.
Failing to Update Contact Details
Although this sounds quite simple and harmless, failing to update your contact details can affect your score. If you move homes, remember to notify your electricity and network suppliers of the new address. If you fail to pay their bills, it can hurt your credit score.
Improving Bad Credit Rating
Do not be disheartened. There are ways for you to clear and improve your credit rating in Australia.
- Set a limit on your credit card, so you do not spend beyond your means
- Do not make multiple credit applications
- Pay all your utility bills and rent on time
- Pay your credit card bills on time
How Long do Bad Credit Scores Last for?
Your credit report records all missed payments, loan defaults, multiple loan applications, and any pending court cases. The score improves as and when you pay off debts. However, after 6 years, you cannot be held accountable for the debt amount on your credit report.
In Australia, non-conforming financial lenders offer credit to defaulters or people with bad credit. For instance, one can get bad credit loans from Finance One despite bad marks on their credit report.