Sometimes it happens that after availing the loan from a financial institution, you fail to pay the installments. With continued defaults, the lender would charge extra interest on the amount that is overdue. In fact, there has been a considerable increase in this type of bad credit loan in Australia and several other countries. Recently, Commonwealth banks reported an increase of about 27% in such bad loans.
Affect the credit rating:
With continued defaults and accumulated overdue interest, you are in a debt trap. Further, this drastically brings down your credit rating. Recently even the ANZ bank reported a bad credit loan of $480 million, which is much above the anticipated bad credit loan in Australia.
Improve credit rating:
Now the question arises, can you repair a bad credit history? Yes, this is possible and there are ways to fix your bad credit report. In the first place, you should keep a close watch on your credit reports. The next step would be to minimize the credit utilization. Defer applying for fresh loans of any sort until you improve your credit rating. Follow these steps scrupulously and with that, your credit rating would improve. See more at Debt Mediators
In case of bad credits, it is the interest on the loan that is the overdue amount which is the real killer. As a matter of fact, a person with a bad credit loan in Australia will be paying three to four times more as compared with the amount paid by the person with good credit record. This is true in regard to all types of loans; be it a mortgage loan, credit card loan or even a personal or car loan.
Do not get into a debt trap:
There are some financial institutions that provide you loan despite your bad credit history. But, this could be a dangerous move and it certainly puts you in the debt trap, and you may even find it impossible to get out of it. Instead of attempting at such a dangerous move it is appropriate that you should improve your credit rating and this in turn will help with credit history turning positive.
Check credit history:
Of course, turning your bad credit into good credit is a challenging task, and it takes a considerable amount of time. In order to achieve this, you will have to keep a tab on your credit score. You check your credit history for free using the tools available online.
Secured Credit card:
Apart from this, you may even consider getting a secured credit card. As you may be aware, in order to get a secured credit card, you will have to pay a fixed amount upfront. The card limit is normally equal to the amount you have deposited. When you use the card, pay the installments and the amount would be credited back to your account. Apart from this, you can also consider becoming an authorized user of credit card of your close friends or your family member.
Prompt repayments will help you:
Always make 100% repayments against your credit card statement. Never default in payment of installments. Do not avail too many loan facilities. Take a closer look at your credit card statements. All these will help you to keep a good credit score.