How to keep your credit report healthy
The cleaner your credit report, the more likely a bank is to lend you money. Your credit report includes a credit score (usually between 0 and 1000 or 0 and 1200), based on your financial track record. This number is essentially a snapshot of what’s in the report and represents your creditworthiness, or how reliable you are as a borrower.
So, how do you maintain a healthy credit score? Here are some things you can do.
Making sure you pay your rent, as well as your bills, on time. This will help you form good financial habits and keep your credit report clean.
Set up direct debits and reminders, and consider using budgeting apps to help you keep on top of your expenses.
If you do miss any repayments or bills, pay them as soon as possible.
Did you know the amount of applications you make for credit could affect your credit score?
Each time you apply for a credit card, it’s noted on your credit report as an enquiry. If you make multiple applications in a short time, lenders may interpret it as financial desperation and be wary about lending you money.
If you’re looking to improve your credit report, it’s a good idea to limit your credit enquiries. Avoid applying for multiple credit cards at once. If you get rejected on an application, wait a few months before trying again.
Try to stick to a budget and pay your credit card off in full each statement period.
Paying the balance off or paying more than the monthly minimum may help strengthen your credit score. It also demonstrates to lenders that you can successfully manage debt and pay it back.
Your credit limit is one of the pieces of information credit reporting bureaus use when calculating your credit score. If you have several credit cards with high limits that you don’t really need, consider contacting the credit card issuers and asking them to reduce your limit.
This may help you reign in the amount of debt you can accrue and improve your credit score, according to Moneysmart.
You can access your credit report for free every three months. The primary reporting agencies are:
If you do notice something’s not right, it’s a good idea to get on to it sooner rather than later, so that it doesn’t affect your ability to take out a loan in the long run. You can find more info about correcting errors in your credit report on the moneysmart.gov.au website.
To discuss your loan requirements, please get in touch. We can help you check your credit report and explain what else you can do to improve your chances of being approved for a loan.
