How to Improve Your Credit Score In 5 Simple Steps
Are you worried about your credit score? Did you imagine your credit score would be in a better position at this stage of your life? Taking hold of your personal finances and your credit score is easier than you think. There are a few straightforward ways you can turn your score around; how to improve your credit score.
1. Do your research before you apply
Research may be tedious, but it works. If you’re tempted to go with the easiest option, think again. Always spend some extra time and consider all options. What do you need? What option best suits your situation?
Always read through the terms and conditions, never go ahead and click the boxes. You must be sure that all the clauses will be suitable for your circumstances. For example, the credit cards that have great perks will often have higher fees.
2. Pay bills on time!
Late or defaulted repayments is by far the easiest way to ruin your chance of a decent credit score. Luckily, the impact of timely and consistent repayments is one of the best ways to redeem your score.
You must realise that each time you miss a repayment, it can impact your credit score. This includes credit cards, phone bills and any other general repayment. An overdue repayment will stay on your credit report for five years.
What’s the best way to manage repayments? You should always set reminders, direct debits or even consolidate all your debts under one personal loan.
3. Only apply for credit when you need it
Many people will make the mistake of applying for as many loans as possible as a means of research. NEVER do this.
Each time you apply for credit, every application will go down as an enquiry and become stuck to your credit report. What counts in this situation? Credit cards, personal loan and car loans are the most common, but other lines of credit will also affect your score. Instead of doing your research by applying for everything under the sun, head to RateCity and get a proper understanding.
If you are making too many enquiries in a short period, your credit score will go down, and lenders see this as a red flag. Whenever you are tempted to apply for more credit, always take the time to assess the situation and ask yourself if you really need it.
4. Take control
Take control of your credit profile. Having an active account will prove to lenders that you have existing commitments. It is essential to an improved credit score.
One situation that may be affecting your credit score is joint bills. If you and your partner are splitting bills, but it’s under their name, only their score will build while yours stays the same.
The less common types of credit include internet bundles and phone plans. They can affect your credit score the same way a mortgage or credit card can. If you are paying for it, have your name on the account.
5. Always check your credit score
Keeping an eye on your credit file is important. It’s also an effective method of preventing a suspicious activity. There are a few occurrences that are out of your control, but something like identity fraud will greatly affect your credit score.
When you are reviewing your credit score, note down anything that is unusual. If there are applications or anything you can’t remember doing, mark it as a red flag. There is no harm in following up on anything. Check regularly, even if you are just checking for peace of mind.
Your credit score shouldn’t be taken lightly. Lenders in Australia are becoming less inclined to approve loans and other lines of credit. Don’t be lazy, attempt to improve your credit score at all times.