A bad credit mark can be out on your credit report if you are late in payments, defaulted on a payment, or even multiple credit enquiries. There are a few things that you can do to improve your credit score in order for it to stay out of the bad credit mark. Here are four ways that you can work towards building a good credit score as part of your new years resolutions.
Borrow what you can pay back
One quick way to tarnish your good credit report is not meeting repayments. At the beginning of 2017 Australians found themselves $7.5 billion deep in credit card debt. The worse thing you can do in this scenario is to get more credit, to pay off your card that you have accrued debt on. You will have to show lenders that you know how to avoid excessive debt, and when you borrow you can repay responsibly.
Pay your bills on time
Show that you can manage your finances by paying your debts on time, whether it be a credit card or a loan. If you fail to meet an overdue payment of more than $150 it can stay on your credit report for up to five years. This could be something that can hinder you from getting a car loan or a home loan in future. As much as we would all love bills to just disappear, you will have to pay attention to anything that is posted or email and make sure that you pay it off. An automatic payment will help you stay on top of things.
Keep your accounts active
Make sure that you build an active credit history through accounts and credit that you know you will be able to meet in terms of repayments. Having zero credit history does not reassure your lender that you are a responsible borrower. Avoid taking out loans or accounts to play keeping up with the Jones or the latest trend, but take it out to keep active with things that you need. You can start off small by taking out something like a mobile phone plan, gas or utility accounts that are registered in your name.
Try to fly under the radar with a clean listing
During the course of the year, you can take initiative to make sure that you don’t get any negative listing that can affect your credit history. These could be listings such as having:
- Defaults on payments with accounts or loans. It’s advisable that you pay these on time.
- Check your credit report for any problems such as misspellings or errors.
- Avoid situations that will result in you having writs, judgements or becoming bankrupt. These stay on your file for quite some time and can affect future loans or accounts you would want to get.
The take home is that you know what you can afford and how much you want to borrow. Keep constants tabs on payments that need to be made in order to keep afloat. If it’s possible, pay more than what is required, so when those months come where money is too tight to mention you would be able to go back to minimum repayments.