Bad Credit In Australia

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Flag_of_AustraliaWhen you have bad credit your life becomes much more complicated. If you can establish a credit line, you will pay a higher interest rate than other consumers. You can be denied for credit cards, mortgages, and auto loans. Employers can overlook you for promotions or decline to bring you on as an employee. Your car insurance rates will be higher than average, and you may find it impossible to rent a flat or car hire. Banks may even decline your applications for simple services like a savings account.

We understand that your bad credit rating may not have been under your control. We also understand that mistakes in the past should remain in the past, and that everyone has the right to secure a more stable financial future for themselves.

With this in mind, we have created a consumer guide called Bad Credit MD. This guide will help you with all the issues surrounding bad credit, including how to repair your bad credit, where to look for credit counselling and how to obtain copies of your credit reports. In the guide you will find information on filing for bankruptcy, wage garnishments, and restructuring plans that may help your situation.

The guide also contains relevant information on how to find a personal loan, auto loan, checking or savings account and even a credit card when you have bad credit.

Understanding the Definition of Bad Credit

While many people have heard the term “bad credit,” most are unaware what defines someone as having a poor credit rating. Whenever you establish a line of credit, the credit issuing company will file a report each month with the credit reporting agencies about your repayment status. If you fail to make timely payments or any payments at all, it is documented on your credit report. Each account that is late or not paid is looked at as a violation of a financial contract. Each violation counts against your report, lowering your score and giving you the status of having bad credit.

Credit bureaus assign numerical value to the status of each account. The higher your number, the better your credit score. Low credit scores are seen as people with poor or bad credit. This information can remain on your reports for seven to ten years.

Various Causes of Bad Credit Ratings

Generally, a single missed payment on a credit line, or a single late payment will not adversely affect your credit rating. However, when you consistently make late payments or stop paying on a credit line altogether, you will see your credit score drop. Late payments on utilities can also damage your credit score.

Loans that enter into default, cars that are repossessed, and unsecured debts that enter into collections activity will also have a very negative impact on your credit score. Bankruptcy can damage your credit rating for a decade.

Another thing that can affect your score is being consistently overdrawn on your accounts and running an excessively high balance on any of your lines of credit.

Risk and Credit Score

Banks and other lending institutions look at credit scores and credit reports to determine risk when they are deciding if they should extend credit. If you have a history of not repaying your debts, the risk will be seen as high. Their only option at that point is to deny you credit, require collateral, or charge you very high interest rates to offset any loss they may incur.

While there may have been valid reasons in your past that your credit was in poor shape, the sad truth is that most lenders are not interested in specific events. They are trained to look at the credit numbers and their interpretations only. This is one of the reasons that it is so important to do whatever it takes to improve your credit score.

How Your Life Is Affected By Bad Credit

Bad credit will take its toll on your life in more ways than you may imagine. While you may believe it will just make it harder to obtain a credit card, the truth is, you will be affected in many ways. Bad credit can:

• Prevent you from purchasing a home.
• Prevent you from renting a flat.
• Prevent you from purchasing or renting a car.
• If you are able to purchase a car, you will have to place a very large down payment on the vehicle and pay a very high interest rate.
• It can affect the amount you will pay on your car insurance premiums.
• It can affect your life insurance cover. Many insurance companies believe that if you have bad credit you lead a riskier lifestyle than those who do not have bad credit.
• It can prevent you from establishing even the most basic line of credit.
• It can cost you a lot of extra money when you do establish credit because of the high interest rates.
• It can cause you to pay large deposits on utilities and phone and Internet service.

Improving Your Credit Score and Standings

There are ways to improve your credit score and report. Improvement will not be seen over night, but you can usually improve your credit score within a few months.

To begin, you will want to resolve any bad debts you have with collection agencies or present creditors. Work with these companies to establish a repayment plan that will allow you to quickly pay off the debt and have it removed from your credit report as a bad debt. You may even be interested in working with a company that helps promote this kind of transaction.

The next thing you will need to do is start practicing good credit habits. Make sure your bills are paid on time, pay down high balances, and refrain from applying for or opening new accounts. You will see a marked improvement on your report within 60 days of paying all of your bills on time.

Finally, if you do not have any credit available to you because of your credit score, you may want to establish a secured credit card or loan. Making on-time payments on one of these financial instruments will help you rebuild your credit.

Prevention and Education

Sometimes the best thing you can do to improve your credit and your financial situation is to seek information about finances and credit. Attend counselling sessions with a credit counsellor to learn how to make a budget or to improve your financial standings.

Once you have learned about your finances, the only thing left to do is maintain healthy financial habits. Pay your bills on time, refrain from over spending, and try your hardest not to get back into the habits that gave you a poor credit rating in the past.



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