Your credit rating is like your representative; it can either speak in good favour of you or reflect bad financial habits to potential financial lenders. Your credit score is calculated by what is called a credit bureau. They analyse how you pay your bills, the amount of debt you owe and how you compare to other consumers who use credit. This can determine your future financial needs like getting a home loan approved or a new phone on contract. How can you get your credit score out of the negative into the positives? Here are our five tips:
Pay your bills on time
You know those payments you keep putting off in your day to day life? Stop! These small bad habits of not bills on time can later affect your credit score. Even if you missed your payment for two days, it makes you look untrustworthy to future lenders.
Stay in the know
A survey by Experian conducted in March found that 71% of people never checked their credit score. Stay in the loop by Accessing your credit report which can give you an overview of your financial status and history on how you have been spending your money. A survey conducted by the Office of Australian Information Commissioner showed that 30% of Australians have errors on their credit files that they don’t know about. Checking your credit history files will reflect the holes which you were not aware of that have been bringing down your credit score. By doing this first you will know what measures are needed to raise your scores. Take time to go through your credit report to see if everything is correct. Your credit report can also show you if there has been any suspicious activity that has caused your credit rating to decrease. Furthermore, Credit Repair found that 1 in 10 Australians have a black mark against their credit rating which prevents them from getting approved.
Have a good debt history
Debt isn’t bad so long as you are able to show lenders that you can stay in control of it. Try to pay all your debts timeously. If possible try to pay in full amount meeting all the minimum requirements to pay off loans. This will also help in reducing interest charges for you.
Only apply for credit when you need it
Ask yourself before applying for credit if you really need it. Some credit can be avoided if you have good financial planning skills. Constantly getting credit in a short space of time can raise red flags for lenders. Not only does it mean that you are a financial risk, but it also reflects poor financial management skills on your end. Research conducted by getcreditscore.com.au shows that credit scores in Australia range from 0-1200. To see if you have good credit it needs to be sitting in the range of 510 – 725, but this will vary according to what card you are applying for.
Mix it up
Flex your credit muscle by showing that you are capable of handling different types of credit at the same time. You can do this by having; a credit card, store accounts, a mortgage, and a car loan to name a few. Try having both short and long term, revolving, and fixed credit maintained in a responsible manner which will help strengthen your credit score. Just ensure that you will be able to meet all the repayments. Avoid taking on more debt than what is needed.