By Jamie Moore Google+
The basics of any Bad Credit Car Loan application is the lender looking at your credit report and accepting what they see.
Your credit file in New Zealand will contain all the information of any previous bad credit – usually for the last 6 years time. This will include any defaulted accounts due to late or missed payments or simply items such as a water bill from a previous address. You report will show any previous finance accounts that you haven’t fully repaid with the outstanding balance showing and who is collecting the debt which can be the original lender or an outsourced agency such as Baycorp. If the information held isn’t correct then this can lead to you being declined for a car loan for having poor credit.
If you have missed repayments on an account and it has gone to the default stage it will count towards having bad credit – no matter how small this is for. Some customers have items such as a water or utility bill and this can be enough to get declined.
One of the main reasons we see for a customers credit score level reducing that many don’t seem to realise is having a high number of credit applications or search’s in a short period. With CF2U we will carry out only 1 search per application but with some brokers out there they will submit your case to many lenders all the the same time – with each one carrying out a check.
Fear not though as there are many ways you can help improve your credit rating and score to make sure that even when declined your next proposal is accepted.
What to do
The first stage in recovering from having bad credit on your credit file is to actually view what details are contained yourself. This can be either done by asking CF2U to give you a copy or contacting one of the main bodies such as VEDA directly. This will allow you to see if the information is correct and accurate – do you for example recognise the accounts shown and the balances outstanding?
Then you need to ensure that the current address held is the correct one and if debts are still owing start to settle as soon as possible. Your credit file will have contact details for the companies collecting the amounts and so even if you can’t pay the total amount you can look to commence an arrangement to pay off weekly or monthly.
Also check to see if the data held is accurate as there could be debt for someone else showing or perhaps for an account that was fully paid off still shows an amount owed. You will also need to request that the lender then updates your credit file to show this process.
When these few steps have been completed you will need to keep a close eye on your credit file to see that it reflects the relevant changes as it can sometimes take several months.
How to strengthen a weak credit rating:
If possible ask a partner or direct relative to go onto an application as co-borrower or guarantor
Check you are registered to vote at your current address
Reduce the number of credit applications you make until the details are correct
Help highlight how you are a responsible lender by being able to repay any kind of finance agreement in full such as a television or smaller loan
Ensure that existing repayments are maintained and any surplus credit that is unused such as multiple credit cards are closed down