BEFORE any lender or service provider agrees to extent you credit or provide a loan, they look at your credit rating to assess whether you have a good record of repaying your debts. However they are not allowed to do so legally without your authority.

Therefore any lender or service provider who intends to check your credit will ask you to sign a Privacy Declaration form. This form sets out the rules and circumstances under which your credit can be checked. If a lender finds out that your credit is bad – for example you have either paid or unpaid defaults, judgments or bankruptcy, they may not wish to lend you money. If you haven’t paid your bills, or if you've had your power cut off, your car repossessed or skipped payments, exceeded card limits or defaulted, you could be refused a loan or be charged a higher interest rate.

A similar problem may be experienced by applicants who have a clean credit history, but have a large number of credit inquiries reflected on their credit file. Lenders equate numerous credit inquiries to a bad credit history and may decline your application. You should obtain a copy of your credit file from Veda Advantage if you are not sure what your credit is like. This can be done for free at www.mycreditfile.com.au (alternatively, you can pay a fee to have your credit file delivered faster).

Step 2 – Errors or Incorrect Information

If you believe that a bank or phone company has unfairly listed an overdue account on your credit file, you should contact them and ask for an explanation and for the incorrect information to be immediately rectified.

If you believe that a debt listed on your credit report is not one that you incurred (could be a case of mistaken identity or identity fraud), contact the credit provider immediately to rectify the situation.
If you are not happy with the response you receive from your credit provider you can contact the Banking and Financial Services Ombudsman ( www.bfso.org.au   ) or the Telecommunications Industry Ombudsman ( www.tio.com.au  )

Step 3 – Pay Outstanding Debts

If you do find that there is an unpaid bill or an outstanding debt that rightfully belongs to you – pay it off as soon as possible. It is better to borrow the necessary funds from family or friends in order to clear your defaults. Paid defaults remain on your credit report for 5 years – hence the faster they are paid the sooner your credit report is cleared. You do not have to spend more, just put all your spending (bills, groceries, petrol, transport pre-pay tickets) on a credit card and pay it off every month. You can arrange with your bank to have your card paid automatically from your savings or transaction account.

Step 4 - Get organised and pay on-time always

Think of ways to get organized, so you can pay all your obligations on-time. Budget and do not take on any debts which you can not afford; Set at many of your regular repayments as you can on automatic payment so that they are not missed. Consider Debt Consolidation – sometimes consolidating existing debts can help you get out of trouble sooner by reducing your set monthly repayments.