How to get around bad credit in Australia

One of the worst feelings in the world is when you arrive at the bank or find out in a shop that your application has been denied due to bad credit.
You may not even realise you have bad credit before the application, yet that moment can be traumatizing.

Even if you realise why you were rejected it can be a deflating situation. When this happens find out how you can improve your credit.

Reasons for rejections
Generally there are a few reasons why you rejected for a loan and a few minor issues could cause the rejection or maybe one glaring credit issue caused it. Lenders reject applications for defaults on your credit report. A default is where you have not paid a bill for more than 60 days and actual debt collection activities have started. Usually it does not include a simple 1 or 2 missed payments.

A loan can be rejected because in comparison to your income, the lender feels you may struggle with repayment. Lastly, you may not have sufficient savings in order to make repayments. Legally lenders are beholden to making smart loans ensuring that consumers can repay the debt.

Improving your Credit
One of the best ways to put a stop to loan rejections is by improving your credit report. This report is what lenders look at when making decisions and lays out your financial life.

Upon a rejection the first thing you should do is find out if your credit report is correct. Sometimes you may have old defaults on your report, an old income that may not reflect your current income or even you may find that the lender checked the credit on the wrong person. In these cases you will want to either contact the credit reporting agency to fix contact and minor errors or contact the creditor that is listed that may be damaging your credit for an issue that was resolved.

If the credit report is correct you can still work on your credit report to improve it including reducing your other debts and getting help if you are having trouble making on time repayments. Repayments are one of the largest factors in loans. If you continually miss payments, you will generally be loaned less because of it. However, you may be loaned more if you never miss a payment.

Alternate Loan Options
You could also look for alternate loan options and beware of high fee pay day loans, or microfinance loans that charge exorbitant rates. These types of loans will simply put you further in debt. Instead look for non-profit loan providers like the No Interest Loans Scheme (NILS), AddsUp, SaverPlus and Good Money. These loans are small low or no interest loan programs supported by the government or charity organisations that help you get a loan you can actually afford.

The next time you want to get help or get around your bad credit in Australia, take these steps to help correct the situation.