Every dog has its naughty moments, and responsible financial behaviour isn’t always on the cards for everyone.
But even if you’ve been in the doghouse, the CarBeagle team have four ways you can fix up your credit history.
Don’t allow your credit score to be dragged down
Some finance brokers are like a dog with a bone – and not in a good way: they end up thrashing your loan application and your credit score ends up buried under a pile of lenders who have all hit your credit file and damaged your chances to secure finance in the future.
At CarBeagle, we’re very careful to negotiate with lenders so that your application doesn’t record on your credit file until we can make a final decision on whether you definitely can (or cannot) secure finance. Because we don’t receive any treats from companies, we take care to sniff out the best finance deal that works for you – not just the first one who throws us a bone.
As you might have guessed, we think your credit file is very important, and it’s a big deal to lenders when they’re assessing your overall financial responsibility as a borrower.
If you’ve got a less than perfect history with finance (and honestly, everyone has paid a bill or two late at least once in their life), then you can check to see what could be holding you back from getting finance right now.
Of course, even if you think you’re being a model of financial responsibility – it pays to check your credit file regularly, its free and you can weed out any incorrect gremlins that may have mistakenly made their way into your credit history, or just keep tabs on your behaviour as a borrower.
Reading your credit file
You can learn a lot from your credit file and – although we wouldn’t recommend it as a beach read – sitting down to understand your history as a credit applicant can unlock the reasons why your application was knocked back.
Maybe you have a default or two – a bill that might have got out of control – and your credit file will list these as paid or unpaid. Unpaid defaults should be addressed as soon as possible, first by confirming if the creditor who lodged the default has a legitimate claim (don’t just blindly accept responsibility for a debt that you don’t recognise!) and then coming up with a plan to pay it off.
Defaulting on your debt should be avoided, but even if you haven’t managed your finances as well as you could have in the past – it doesn’t lock you out of applying for finance in the future.
Lenders are able to distinguish between defaults as financial and non-financial: for example, if you took out a personal loan and then couldn’t pay it back – a lender might consider this more seriously, because you overcommitted. However, if you missed the last bill of your phone contract before changing carriers – and missed the deadline to pay it – a lender will have a bit more leniency if you made amends to pay it off quickly.
Even if you have an outstanding debt that you’ve defaulted on, making an arrangement with the creditor to pay it back is better than leaving it to hang around on your credit file. Lenders can see the date a default was entered onto your credit history, and the date it was paid – and you can forward any payment plan details on if it’s still outstanding – so they know that you’re actively trying to fix your credit history.
Partnering up to debt
Paying for a date or two is part and parcel of a relationship, but if it starts to seem like your doing most of the financial heavy lifting – you might want to have a chat about your partners situation regarding their debts.
Money isn’t a fun topic to raise with your significant other (unless you’ve just won the lottery), but you can avoid a big blowup in the future by having the uncomfortable conversation when you feel like your wallet or purse always has a hand in it – less stress for you, and for the relationship in the long run.
If you notice that your partner has a pattern of reckless spending habits, maybe it’s the hefty credit card bill every month or they end up just scraping through to payday – or worse, coming up short – it might be time for some tough love so they can get their act together.
While your instinct would be to help them out immediately by taking over more of the bills or helping to pay down some of their debts, it’s important to take a step back and think about your financial health in the long-term. What happens if the relationship goes south? If one of you had to stop working? Maybe you decide to buy a house together – but one of you has stretched yourself thin taking care of the others responsibilities?
You can’t plan everything precisely in your future together, but having a frank discussion about financial responsibilities – especially as it starts to get serious – will help you avoid committing to more than your comfortable with.
Remember: as soon as you start going for joint finance applications, both of your credit files start to get attention from lenders – while you might joke about ‘the old ball and chain’, you don’t want your partners checkered financial history bring you down when you’re applying for a loan.
At CarBeagle, we are all about being upfront & transparent with you on both the little and big things when it comes to your loan. We are serious about responsible lending and protecting your credit file, and will workshop your specific scenario with a number of financiers to get you the best deal.