As the Christmas and New Year financial hangover finally starts to seep in many people are reeling from taking things to excess over the festive season. Data tells us that one third of Western Australia residents are affected by debt stress. If your debt means you pay your credit card or phone account late every month or you are committing any other kind of financial “sin” your credit rating is likely to reflect it. This is counterproductive to anyone’s financial planning because it is going to present itself to the banks and financial lenders if you ever apply for a loan.
If you are still working on your financial plan for the year it is probably a good idea to have a credit rating check. Late payments and outstanding debt are just two of the ways you can affect your credit history in a negative way. Here are some other practices and habits to avoid to protect your financial future, and ensure you meet your financial goals.
Multiple Rejections for Mortgages, Credit Cards and Loans
Every time an application is rejected the lending institution documents it and whenever you reapply for a new loan all of your previous applications will come up. In order to take control of this it is advisable to stop applying until you have found out why you are being rejected, and resolved the reasons for your rejections. You must liaise directly with the lender to get to this point.
Late Payments, Defaults and Maxing Out
Fortunately settling any outstanding payments can resolve problems like late payments and maxed out cards but you must remember that the details about it will be recorded by the financial institution. If you experience on-going problems for a while it could affect your financial standing, which may affect your future ability to secure a loan. This is important, since according to recent research conducted (source: Bankwest Credit Cards) nowadays, most people applying for credit cards are doing so to secure a loan.
Moving Out of a Rental and Not Changing Your Bills
If you do move out of a rented property be sure that you close any accounts for the residence in your name. If utility bills continue to be delivered to the address, are made out in your name and remain unpaid it will also affect your financial record.
Make sure all correspondence is maintained in writing and stored so you are indemnified from liability in the event that your requests are not carried out.
Beware Unpaid Fines
Any official, unpaid fines will be recorded on your credit history and these could be things like fines you have acquired at a public library, fines from unreturned videos and fines from parking lots that have not been paid. Any of these can give you black marks on your credit record.
Getting Written Off as a Bad Debt Spells Bad News
It is not unusual for institutions to throw in the towel when trying to collect outstanding debts, because trying to recover the money just proves too costly and time-consuming. When debts are written off it usually means the institution will no longer make any effort to contact you but your infringement will stay on record.
It is good practice to have a personal credit check performed before you apply for a loan, credit card or mortgage. If you do see black marks against your name you need to make contact with the relevant institution. The majority of them will cooperate to help you correct issues. Sometimes the matter is as simple as settling any money that is owed. Research also tells us that not many people who experience problems with debt actually look for help. Consider the assistance of a financial planner to improve your credit rating and chances of securing a loan in your future.