7 Wisr Ways To Improve Your Credit Score
There’s always room for improvement when it comes to keeping your credit health in check.
Yep, even a great credit score can be improved! We’ve come up with seven helpful tips to help you stay on track and improve your credit score.
1. Keep your credit applications on the down low
When it comes to shopping around for a personal loan, getting the best rate is an important factor for many borrowers. When you make a credit enquiry for a loan or a credit card it is recorded on your credit report, even if you don’t follow through with the application.
Submitting several loan applications to multiple lenders with the hope that one will be approved could be detrimental to your credit score.
To help reduce your risk, you should consider the “six-month rule”, meaning that you try to limit yourself to just one or two credit enquiries every six months. It is also worth using online calculators and services which won’t impact your credit score before submitting a formal credit application.
2. Pay your bills on time
Even the most organised people sometimes forget to pay their bills on time. Late payments for bills over 14 days for credit cards, personal loans, auto finance and mortgages going back two years can have a negative impact and lower your credit score.
It is important to always pay your bills on time and if there ever is a problem, make sure it is paid as soon as possible and keep the company informed about your circumstances to avoid having a default listed on your credit file.
3. Avoid defaults (overdue debt) at all cost
If you are overdue on a payment that is more than $150 and you have been given notice of the intent to default, this is serious and could result in a formal default being recorded on your credit file for the next five years. This record could also stay on your file, even if you subsequently pay off the amounts overdue.
If you’re struggling to pay your bills or meet your regular repayments due to unexpected circumstances, it’s best to contact the Biller or credit providers and see if you can apply for a hardship variation and negotiate a repayment plan.
4. Review your credit report regularly and correct errors
You are entitled to obtain one free copy of your credit report per year from each of the major credit reporting bureaus (Equifax, Experian and Illion). iEven if you believe you do not have any negative information on your file, it is still wise to check it, as there could be errors.
If any information on your credit report is incorrect it is important to fix it straight away otherwise future credit applications will be affected.
Check out the WiserCredit Bootcamp on how to take control of your personal credit file.
5. Keep an active credit account
No, we’re not recommending you go on a huge shopping spree. But it’s actually a good thing to have a proven credit track record that shows you can meet repayments of any credit outstanding, including mobile phone plans, an internet account, utility accounts even a personal loan or credit card.
As long as you are managing your debt well and meeting all your commitments, this demonstrates to lenders that you may be a worthy credit borrower and may even help increase your credit score over time as long as you consistently manage your finances well.
6. Consolidate your debt
When you try juggling too many repayments for multiple debts, this could lead to missing payments or worse not having the sufficient funds needed to cover the payments that fall due. Reducing your debt may be helpful to your credit rating in the long run.
If your credit file is free from any negative listings and defaults, then your bargaining power may lead to a lower cost way of managing your debts. Consolidating several loans or credit cards incurring high interest rates into one lower interest rate loan may be a wise thing to do.
7. Know what counts on your credit file
It’s more than just credit cards and loans that affect your credit file. Taking out a new phone plan or connecting to a new utility company could impact your credit report, as these companies may make enquiries about your creditworthiness.
It’s also important to know that not all enquiries are treated the same way. For example, a short-term loan (also known as pay-day loans) or car finance may be seen as riskier to a lender than a home loan application or new electricity connection.