The Banks are watching!
Most people underestimate the impact their credit activity can have on their chances of obtaining finance. If you’re looking to apply for a home loan, car loan or obtain credit card, financiers will assess your credit score before making a decision on the application.
Below we’ve listed 5 things you can do to help improve your credit score.
Pay your bills on time
This is an obvious one. One of the most important things you can do to help increase your credit score is to pay your bills on time. Since the implementation of Positive Credit Reporting, activities such as repayment history on loans and credit contracts can be reported on your credit file. Setting up payment reminders within your online banking account can help. Also setting up direct debit payments for bills and loan repayments can reduce the chances of missing a payment.
Only apply for Credit when you’re ready to move forward
Many people are unaware that multiple credit inquiries within a short period of time can have a negative impact on your credit score. Financiers observe a busy credit file with suspicion. Lots of activity can indicate rejection and imply that the applicant is less likely to be credit worthy. By all means shop around and do your research before making a decision. Just hold off from submitting an application until you are 100% sure that you are moving forward.
Reduce your Credit Card limits
Having a high limit on your credit card means you have the potential to spend that limit. When assessing a credit application, financiers will factor a percentage of these limits into your income and expenses for capacity calculations. Do you really need that $20,000 limit on your credit card? Credit providers will constantly offer limit increases and they’re tempting to accept, however keeping these limits to a minimum will help increase your credit score.
Pay off existing debt
Reducing your overall debt is another way to help increase your score. Credit providers view a high amount of outstanding debt as a risk, so it’s less likely they will be comfortable to provide further credit. Paying off debt can also help relieve the financial stress associated with high amounts of outstanding debt.
Avoid Adverse Listings on your Credit File
Defaults, Court Writs, Debt Agreements and Bankruptcies are all listings to avoid on your credit file. These listings can arise if you don’t pay your bills on time. Keeping up to date with your credit activity can help reduce the chances of being hit with an adverse listing on your file. If this occurs, you can always challenge the listing if you feel it is unjust. It’s also a possibility to engage a credit repair agency to help remove an adverse listing, however fees will apply.
Staying on top of your finances will go a long way towards increasing your credit score. By taking a few simple steps, your chances of being approved for that new loan will significantly improve. For more info, check out My Credit Score.