If you’re applying for any kind of financing, ensuring you have a good credit score is one of the most important steps. Your credit score is a track record of how you manage debts. While it can be negatively impacted by late repayments, the good news is that it can also be improved by doing the right things. Here are some ways to turn your credit score around:
Pay bills on time
Late payments can significantly dent your credit score. To improve it, ensure you pay all your bills punctually. This includes credit card bills, loan repayments, and utility bills. Setting up automatic payments or reminders can help you stay on top of due dates and avoid late fees, thereby safeguarding your credit score from unnecessary harm.
Don’t use all your credit
It’s your job to show lenders that you’re responsible with credit. Another way to do this is to not use up all the credit you have available to you. If your credit card balances are high, consider paying them down or spreading them across multiple cards to lower the overall utilisation ratio and potentially boost your score.
Correct errors on your credit report
Regularly review your credit report for inaccuracies or discrepancies. Mistakes such as accounts that don’t belong to you or incorrect payment statuses, can harm your credit score. If you spot any errors, dispute them with the credit reporting body to have them corrected. Addressing these inaccuracies can lead to a fast improvement in your credit score.
Limit new credit applications
Each time you apply for new credit, it leaves a mark on your credit report. Multiple applications within a short period can be viewed negatively by lenders and may lower your credit score. Try to hold back from unnecessary credit applications and focus on managing your existing credit accounts responsibly. By avoiding new credit inquiries, you can help safeguard your credit score from unnecessary fluctuations.
Maintain a diverse credit mix
Having a healthy mix of credit accounts, such as credit cards, personal loans, and mortgages, demonstrates your ability to handle various types of credit responsibly. However, avoid opening new accounts for the sole purpose of diversification, as this could backfire.
Review your report
Under Australian law, you’re entitled to one free annual credit report from each credit reporting body. Reviewing your report allows you to identify areas for improvement and ensure the accuracy of your credit information.