Have you recently been declined for credit? You’re not alone. While a single rejection for a credit card, mobile phone contract or hire purchase agreement is unlikely to make a severe impact upon your credit score, you’ve just become one of the estimated 3 in 4 people to receive a rejection notice over the 2010-2011 period. The reason? You’ll probably never know unless you’re intent on doing some covert analysis of your credit profile. It could help repair bad credit fast!
More often than not, credit rejection occurs due to erroneous communication and/ or writing error. Whether you inserted a lowercase letter at the start of your name, or a call center worker misinterprets a digit of your house number – if unchecked, both will lead to an epic fail on the application. Then there’s the issue of written applications. If you aren’t a phenomenal speller, chances are, your application form contains errors that you don’t even realize. Illegible handwriting too can play a significant part in the misinterpretation of data at the receiving end for credit applications. Of course, your rejection could be for a far more legitimate reason, such as an adverse credit profile (analyzed by a simple, reflective credit score) or wrongly recorded information on your credit profile. Far rarer are circumstances involving identity theft, which opens a very different can of worms.
Credit repair and resolution has become big business in recent years, with countless agencies and organizations setting up both online and on the high street. They promote the possibility of repairing credit through various methods which include: debt consolidation, cleaning your credit profile and through a new product known as an IVA (Individual Voluntary Arrangement). The service of debt consolidation usually provides customers with a lump sum loan amount which is used to pay off existing creditors, and leave the debtor with one, lower monthly amount by which to pay back a loan. An IVA on the other hand is not a short term solution. It is an agreement which usually spans around 60 months and which is legally binding. A company acts on your behalf by obtaining an Interim Order within a Court, which prevents any further contact made to you by creditors and binds you to an agreed monthly repayment plan, until the outstanding debt is repaid.
Credit wiping is a controversial method, with many reviewers stating it is a largely useless service due to the fact that consumers can carry out the same actions themselves by obtaining their credit reports. Credit wiping is just that. The service/ agency charge a fee. They then obtain all of your credit reports and analyze them for incorrect information or anomalies. They liaise with you to check the factual correctness of entries and also liaise with your creditors both present and past, to ensure your debts have been repaid, as well as the correctness of any defaults. If your past financial misdemeanors have been rectified, the company will report any changes to the credit agencies and have any anomalies removed from your credit report. This may sound like a lot of work, however is easier and cheaper to do it yourself. You know more about your financial commitments past and present than you can relay to any agency, and most likely still possess evidence of debts paid off.
Contrary to the belief of many, there is no quick and surefire way of repairing a credit score, unless your report contains any out-of-date or factually incorrect information. These anomalies are very easily rectified providing you either have evidence of paying the outstanding debt, or liaise with the creditor in question to resolve this issue. If it is a simple case of the company not reporting repayment of an outstanding amount, they are highly likely to update the credit reference agency as per your request. Additionally, if a registered debt has now been rectified and repaid, you should contact the credit reference agency in question who will then confirm this information with the creditor and update your report. The default or debt will still be visible on your report for several years, however will no longer count as being outstanding. This may improve your credit score to some degree.
Many people are under the impression that having a number of lines of credit will improve their credit score. This is not usually true. In fact it can have a very negative impact. Lenders look at a credit report to determine your reliance upon credit, as well as how responsible you are. If you have a number of loans, hire purchase agreements and other financial credit agreements running at the same time, you can be deemed as being too reliant upon credit, with no residual income left to live upon.
Aside from self-checking credit reports, there is very little else one can do to “bump up” one’s credit rating quickly. Becoming more financially organized and astute is the no. 1 recommendation. Avoiding any possibility of gaining further defaults or missed payments being logged should be the priority, as lengthy periods of being a good credit-holder will hold you in better stead. It cannot be stressed enough the benefits of analyzing your credit profile. You can obtain your report for a small, nominal fee from the main credit bureaus.
In the US: Experian, Equifax, TransUnion and Innovis.
In the UK: Experian, Equifax and CallCredit.
It must be stressed than analyzing your own credit report is no easy task. Be prepared to be confronted with years of activity, which quite possibly will be sent printed on two-sided A4 reports. The key “incidents” to look for are any that you don’t recognize, since this could be indicative of identity fraud. Secondly, examine your history to confirm all past agreements have been recorded as concluded and the “open” ones are only those you hold currently. Found an anomaly for a credit card agreement you had five years ago? You need to contact them and request they update the information they hold with the appropriate credit reference agency. You will need confirmation of this to forward to said agency and have the anomaly rectified. As with any personal financial request, ensure you seek confirmation of it in writing. The third action is to analyze recordings of any defaults on agreements. Astute bill payers should not discover any recent entries. If this happens to you, seek notification from the body responsible for recording this entry, as it may be an error. Providing you are able to obtain written confirmation from the company, you can thus request removal of the entry by that company. Always check to ensure your credit report has been updated.
If, like many of us you’ve struggled under the pressures of the current economic climate, its likely you may have had some issues managing credit. Usually, a credit provider will attempt to seek repayment over the course of 1-3 months, prior to submitting a “default of payment notice” to your credit reference agency. Unfortunately, it cannot be removed if you resume payments outside of the three month window. Adhering to payment arrangements as well as making payments on time will gradually improve your score as it proves you are financially responsible, therefore more “credit worthy”. This, coupled with self analysis of your credit report, could make the difference between the next acceptance or rejection. Whatever you do, don’t pay for the privilege of having your credit report “wiped.” It rarely works and you could end up with no credit history at all!