How to improve credit score ?

Hello,

Turns out my partners credit score is to low and we now cannot apply for a home loan.
How does one fix this and how long does it actually take ?

We are obtaining the credit file as I type, however I have no info in how you up your score and how long it actually takes.

From what I read, paying any defaults will not remove them and not change your credit score ?

IF that as true then how do you actually improve it ?
We have paid off the credit card just now today - does this improve anything ?

What to do ?

 

You're starting in the right place by getting a copy of the credit file. You need to understand why it's low and address that problem. Paying defaults won't change things immediately, but things certainly won't get better whilst the defaults remain.

There's also lenders that won't immediately decline loans just on the credit score. They will look at the bigger picture. What they do want to see is that you've been working towards improving things overall. Even just 6-12 months of good behaviour can make a difference.

To improve your credit score:
* Avoid taking on consumer debt such as credit cards & personal loans.
* Pay bills on time or early.
* Don't shop around with half a dozen lenders. Multiple enquiries can raise red flags with lenders. Instead use a broker to help select the most appropriate lender.

 

Thanks

So I found 3 defaults, what the hell. These are utilities - even if these are paid, this done not improve the credit score, so I am not sure how there is a way out of this dark hole now

 

Three defaults is pretty bad and it's going to take some time.

Firstly make sure they're paid. There are lenders that will ignore some utilities defaults if they're smallish and paid. If they're not paid your options reduce significantly.

Why did these defaults occur? Mainstream lenders do have some forgiveness but they'll want an explanation. Sometimes utilities get overlooked because somebody moved or was taken advantage of by another party in a joint usage situation.

Ultimately time will heal this. Defaults usually only stay on the record for 5 years. Even after a year or two, the effect of these defaults will be reduced as long as there's been good behaviour since.

Also have a larger deposit available. If you're trying to purchase with a 10% deposit you're in trouble. With a 20% or larger deposit, you've got some decent options.

 

I've been keeping an eye on my credit score lately and trying to work out what affects it. I had a credit enquiry for a mobile phone that was declined back in 2015 and when it dropped off my credit report in the last few days my score jumped from a very good 775 to an excellent 871. Having a default drop off their report should make a fair difference.

With the current system the banks report whether you are up to date with your payments on your credit card and your home loan which supposedly increases your credit score. Would it be possible for your partner to get approved for a credit card with a low limit of $500? It might be worth asking your bank if an approval is possible. And some banks allow a credit card in joint names so maybe try one of them for a card with a low limit. Keeping the card up to date each month should in theory increase your partner's score over time.

 

We had a $1000 credit card Only, I paid and closed it actually today.
The utilities I also paid today that we did not even know existed on the credit file it's been there since 2017 apparently.

Also the deposit we have is 20%

but the broker has said it cannot happen at this stage as credit score is to low.
I am absolutely crushed.

Now it is a good 2 year wait for then defaults to drop off - that's just ruined everything
Never felt so damn down and just giving up. It was a hell of a ride to get to 20% and now we are like for what ?

/crying

 

Utility bill payments also are starting to appear on credit reports and are more likely to have a positive effect than a credit card in her name. With a bad credit score there's also a chance that a credit card application would be declined, making things worse.

With a 20% deposit, there are lenders that will likely overlook utilities defaults, but you'll pay higher rates. You may be better off taking this option now, then refinancing after a year or two of good conduct to a cheaper deal.

 

There is a fairly strict process that any creditor/utility provider etc needs to follow before they can list a default on a persons credit file - if you dispute the defaults via Equifax o Illion or whoever you got your credit report from, they must investigate and ensure the correct procedure was followed, if ANY of the process was incorrect or incomplete they must remove the default listing. I am speaking from personal experience here, I successfully had Equifax remove a disputed Origin Energy default listing off my credit file due to the fact that Origin had not sent ANY notices of the supposed debt or attempted to contact me at all about it prior to listing it on my file.

There is also another option - call the utility provider who the money was owed to, propose to repay the debt only if they agree to remove the default listing from the credit file, I have had clients who had success doing this. You cannot back down, you have to stick to your guns and be pretty firm that you won't be paying a cent unless it's removed, if they agree then get it in writing before paying.
This may be too late if you've already paid.

What amounts were the defaults for? Some lenders may still consider depending on $ amount

 

How do you not know about utilities defaults? You moved overseas and had no mailing address?

This is one of those ‘not enough preparation’ issues. Credit report review should be done regularly. Sign up to email for utilities, mobiles etc, so you don’t miss bills (but not necessarily direct debit).

ignorance is no excuse.

 

Good points Lindsay
You are right though may be to late now as it was paid already.

But we will contact Equifax and have a discussion about this and see what they have to say.
One was for $300 another for $159 and one for $218

We moved a lot during those times so I can see looking back how this has happened I guess without mailing addresses updated it would be not the utilities fault other than our own for not keeping in check with everything.

We will just have to put the money away maybe in a term deposit and see what happens with the credit file in 6 month increments - it's just a long delay is how we have to deal with it and just keep adding then to our already 20% and increase it in the mean time.

 

I just want to add I received a private PM from someone who has 0 posts to go to a link they provided to have my credit file repaired and they can remove the defaults
I don't fall for these kind of scam things but thought I would mentioned it here that looks like people view posts here and then sending links in PM's

 

There are businesses that provide services to remove credit defaults where the defaults are legitimate. The legit ones tend to be law firms with a specialist area for this. They should be able to give you an assessment of the odds of success prior to you paying a significant amount for their services. It's worth following up.

 

I have had 2 defaults removed by a credit repair company and throughout the process i learnt quite a bit about defaults. As mentioned by Lindsay, if a creditor did not follow the correct process then there’s grounds to remove default (apparently majority of the time this is the case). Secondly if you haven’t paid off the debt you can negotiate but obviously get it in writing. I want to also add
Creditors can consider default removal on compassionate grounds - such as death in the family around the time default occurred (you must produce death cert)

Most people seem to frown upon credit repair companies but just like every industry, there are good and bad. As Peter mentioned, there are ones that are reputable who can deliver results. They are actually first and foremost lawyers, and specialise in this field .They act on your behalf, investigate and present your case professionally to the creditors. The company i used assessed my case/situation and said 99% success chance. IF they cannot deliver then I don’t pay them a cent and that was the only reason i signed up. To me this means they will only take you on if they are serious and confident, unless they want to waste their own time.

There is one major problem that the credit repair company conveniently forgot to mention. IF you have multiple defaults and one of the defaults cannot be removed. Sure, you only pay for what they removed but if there’s even one default remaining, it defeats the purpose. A way around this is maybe negotiate (on paper) that all defaults removed before payment. If you only ever had the one default then i guess nothing to lose. I’m curious, has anyone here used a "credit repair" company? Did you have success? Surely i cannot be the only one.

Also, they are lawyers who just want results and get paid. They just look for mistakes made by creditors and use that to win. But morally is this ok? what if you are not responsible with money and will just default again?

BTW, in the one who pm MTQ but only in good faith. I’m on here all the time but only sign in and post in the rare occasion i have something to contribute. I have posted before, but probably not showing because it was when this site used to be Somersoft

And on a side note, i hold this forum and the regular posters solely responsible for the success in my property journey. Learnt and gained too much. Thanks!

 

What these companies do, you can actually do yourself, it just requires some time and effort. They don't do anything that requires a degree in law.

 

Companies get it wrong all the time and damage people's credit files. Origin energy had my email address, my mobile number my new address but didn't send notices prior to listing a default for an old account that I had requested in writing be closed.

 

Equifax wont help you

Defaults can only be removed if they were incorrectly placed (also if the lister cannot provide evidence it was correctly placed)

Id avoid a credit default repair companies. A good solicitor in this field is probably better if you don't want to diy. Its like a conveyancer v solicitor.

First thing you need to do is establish the facts - Get a log of all contact made between you and the financial party (phone calls, emails, contracts, bills). While some sort of assertion must be used they do provide it - if not speak to the relevant ombudsman (eg energy/water etc) but whatever you do, do not allow them to investigate - just say you want the facts.

Then you need to compare it to the legislation (its in the privacy act) and its not that difficult. Most difficult part would be sorting out the communication above.

Then if you find something hasn't been followed provide it to the company and request it be removed immediately. If they do not accept then go to the ombudsman and ask them to investigate - but do not ask them to investigate until you are sure they did something wrong.

Also check if they still own the debt. If its been sold to a collections agency then even better. When they purchase the debt they purchase the liabilities involved (if incorrectly listed). Ive heard stories of them removing defaults without much hassles as they were unable to get a reply from the original listing company on time. Next one not sure if legal but ive read they sometimes charge $$$ remove the listing.

Also again (just read places) that if the bill hasn't been paid could possible negotiate the removal of the listing for closing the bill.

Energy utilities have been caught quiet a bit for non compliance and there is a lot of poor media

 

This seems so obvious that I think maybe I missed it: Can you apply in your name only?

 

They got mine removed when they investigated and found out it was incorrectly listed so YES they can help.

 

Not too sure about when you enquired but I did earlier this year and they said they couldn't do anything

Though the financial provider did request Equifax to remove after their own investigation

 

There's a whole section on Equifax website - Fix my Equifax credit report