Cleaning up your credit history

Viewing your credit report on a regular basis is good practice to keep yourself updated on how you manage your financial responsibilities, but what happens if your credit history is less than pristine? For instance, you’ve been rejected for credit countless times, or you’re significantly behind on monthly repayments. When it comes to first impressions, the information contained on your credit report can have a huge impact on your future applications for credit.

Here are four easy ways to clean up your credit report.

1. Make payments on time

The more on-time repayments you make, the better your credit file will look. This is mainly because new credit reporting reforms mean that your credit report will start to show positive payment history, or the payments made on time, as well as late. Paying your bills more than 30 days late will incur a default, which stays on your credit file for five years.

2. Address any inaccurate information

If you believe any information your report to be inaccurate, it’s recommended you contact your credit provider straight away to rectify the issue. This may occur if, for instance, your credit provider mistakenly believes you have overdue debt or other financial liabilities that have not been previously addressed. In these cases it’s a good idea to obtain relevant documentation from your credit provider acknowledging the mistake, and then provide this information to your credit reporting agency. More information can be found here.

3. Go easy on credit card applications

Applying for multiple credit cards, loans or other financing in a relatively short period of time shows up on your credit report, and can pose as a red flag for potential lenders. Numerous applications can indicate a high level of risk and an irresponsible appetite for credit, especially if you have unpaid debts to begin with.

4. Avoid bankruptcy

Personal bankruptcies remain in your credit history for seven years, and in many cases this listing is enough to flag you as a high credit risk. Once declared bankrupt, you will be listed on the Insolvency and Trustee Services’ public register. This may also mean that your bank accounts will be terminated, assets sold and employment security affected.