Your credit report is an important document. It tells the details of your financial status, highlights how much debt you have, your payment history, and any judgements against your name for overdue or unpaid debt. This is one of the first documents that creditors will check when you apply for credit. If you have a bad credit history, you most likely will not be granted a loan.

But what if you have taken on too much debt? What if your credit report is in a bad state? How can you fix it? There are a few things you can do to improve your credit report, but it is a timely process, as your report is only updated by the credit bureaus every few months.

Here’s how to start:

  1. Don’t simply miss a debt repayment.
    If you are struggling to meet your monthly debt obligations contact your creditors and try to make an arrangement. It is important to keep them updated as to any payment difficulties you may be facing.
  2. Don’t take on more credit.
    If you have a bad credit report, you most likely won’t be eligible to take on more credit anyway, but if you are, avoid it.
  3. Pay your debts on time.
    It might be easy to forget to make a debt repayment and only pay it a few days after it was actually due. While this won’t have major impacts on your credit profile, it will show up on your credit report as late payments.
  4. Pay more than that minimum payment due.
    This will show that you have good control of your finances, and will reflect well on your credit report.
  5. Access your credit report regularly to ensure that all the information it contains is correct.
    If any of the information is incorrect or out-dated, contact the credit bureau to rectify this, as incorrect information could have negative repercussions in the future.

One of the most important factors to building a good credit profile and credit report is to have a good payment history. Avoid taking out unnecessary credit, pay on time and pay more than the minimum amount require, and you should be on the path to a good credit record.

Until next time,
The MoneyShop.co.za Team