| Apr 20, 2015
If you have ever had a credit card application or a car loan rejected, chances are you have a bad credit score.
What's even more frustrating is your bank will never tell you why - but read on and you will find out.
Almost 60% of Australians don't understand credit reports, 79% are not concerned about their credit history and 78% have never checked their credit report, according to Veda and the Australian Retail Credit Association. So, unless you know what factors affect your credit rating, you could be hurting your chances of getting approved for credit.
To help improve your chances of getting approved for a personal loan
, watch our for these 10 ways you could be ruining your credit rating without even knowing it.1. Paying late
Mistake: Whether it's credit card repayments or the energy bill, a late repayment goes down as a black mark against your credit rating.
Fix it: Pay your bills on time and avoid the tax collector. Keep from being marked as a charge off (unable to pay your loan), and stay away from filing for bankruptcy, having your assets repossessed by a lender or foreclosing a business. Doing so should keep your credit report reasonably healthy and improve your creditworthiness.
2. The amount of debt you owe
Mistake: Many Australians are in debt, and the Australian Bureau of Statistics tells us that in December 2014, we owed over $1 billion in personal finance for motor vehicles.
Fix it: When we owe a lot of money, our credit rating can take a hit, so seek out ways to pay off your debt first - before applying for another loan.
Debt consolidation is a smart way to pay off multiple debts with one convenient, regular repayment at a low interest rate. SocietyOne is currently offering fixed rates from 8.95% p.a./ 8.95% p.a. comparison rate to AA-SocietyOne borrowers.
Related article: Debt Busters: How To Eliminate Your Debts in 2015
3. Opening too many credit accounts
Mistake: Every credit account will be taken into consideration by a lender. Even if you are given a personal loan, your "rate for risk" will mean your loan rates may be unnecessarily high. This means for the life of your loan you will have to pay an excess of unwanted interest.
Fix it: Again, consolidating all of your debt will cut down on the amount of accounts you have and will enable you to pay off the loan quicker.
4. Not having enough credit
Mistake: If you've been hesitant to seek out personal loans in the past, your credit rating automatically goes down because there is no proof that you can manage a loan.
Fix it: Build your credit by loaning with credible and trusted lenders.
5. Submitting too many applications
Mistake: Avoid submitting too many applications. Loan agencies can view your previous applications, and submitting too many may signal you are desperate (rather than say, comparison rate shopping) and potentially unreliable.
Fix it: Remember, credit enquiries stay on file for five years.
6. Having a negative credit history
Mistake: Bad management of previous credit gives you a big black mark in the eyes of future lenders.
Fix it: Avoid credit card cash withdrawals and payday loans; instead consolidate your debt or talk to your credit provider and discuss alternatives.
7. Mistakes on file
Mistake: Sometimes, simply filling out your application incorrectly or not providing enough information can count against you.
Fix it: Go through your applications and make sure your details are correct and uniform. Double-check the address that your bills and statements are being sent to, and make sure there is no incorrect information on them.
8. Bad Timing
Mistake: If you've had bad credit in the past or have been in legal trouble, your credit rating will suffer.
Fix it: Bad credit can linger on your file for anywhere between two and seven years, so time your applications well once these are off your file.
9. Old credit
Mistake: You may have a pile of old credit you no longer use.
Fix it: Shut these accounts down before you apply for your next loan. Your experience with credit will show - and prove - you are able to manage a loan effectively.
10. Joint loans
Mistake: A joint loan can drag your credit rating down if your partner has bad credit.
Fix it: Remember you are legally bound to pay off their debt too, so think carefully before entering into a shared loan arrangement.
To boost your credit rating and avoid making these common mistakes, look to SocietyOne for low, fixed personalised interest rates. Australia’s leading peer-to-peer lending company can provide you with a rate quote and your credit score within 2 minutes, by simply filling out an online form.