6 Tips on How to Improve Your Credit Score
A good credit score is a reflection of your financial history. Maintaining a good one is essential to help improve your chances of loan approval the next time you apply. If you’re planning to rent or purchase a home, a good credit score will be taken into consideration.
If you have a low credit score, don’t beat yourself up over it. It’s not the end of the world because there are ways to improve your credit score. Here are some of them:
1) Pay your bills on time
If you haven’t been paying your bills on time, then now is the time to do it. On the other hand, if you have been paying them on time, then make sure to maintain it! A record of punctual payments contributes to a good credit score. For you not to miss any bill due dates, consider setting up automatic payments that’ll help you stay on top of your monthly bills.
2) Have an active credit account
If you plan to apply for a new line of credit, lenders will take a look into your credit score to check for good repayment behaviour. This is to ensure lenders that you’re a responsible borrower. Maintaining an active credit account would be helpful. On the other hand, if you don’t have any open credit lines, you can use any utility bill under your name that can help you build an excellent credit history.
3) Pay existing loans & debts
To increase your credit score, first, you have to pay off any existing loans and debts. Before you apply for a new loan or credit line, make sure that all your current loans or debts have been paid, or consolidated into a single facility to reduce the number of active loan files.
4) Seek help from a financial counsellor
There are going to be times when you’ll struggle to come up with a plan to have your finances in order and rebuild your credit score. The best way to handle this is to get financial advice. They can help you formulate a plan to rebuild your credit score through disciplined financial behaviour.
5) Check credit report thoroughly
Go through your credit record and check for all the listed information. See if everything’s inaccurate. Should you find any inaccuracies such as incorrect debt amounts, duplicate debt listings, debts you didn’t take, unrecorded repayments, etc. address them right away. You can request a credit report from three central reporting bodies here in Australia — Experian, illion, and Equifax.
6) Lower existing credit card limits
Consider reducing the credit limit for your existing cards. This will place a firmer limit on the amount of debt you can get. In turn, this affects your credit score as it will reflect a positive action on the report.
A low credit score may be very challenging to get out of, but you can recover from it. These six tips will help you increase your credit score. And aside from these tips, it will also take a lot of discipline and hard work on your end to make it work.