Six New Year’s resolutions to boost your credit health in 2019
Staying on top of your credit report regularly is good practice to keep yourself updated on how you manage your financial responsibilities. But what happens if your credit history isn’t as clean as you want it to be? When it comes to first impressions, the information contained on your credit report can have a massive impact on your future applications for credit.
Here are some tips to improve your credit score and take the right steps towards financial responsibility in the new year.
1. Having a credit score is important
A good credit score is sometimes better than having no credit score at all. Loans are a necessary part of life for most of us and building and maintaining a high credit score can impact your quality of life, now and in the future. For example, when paying off a mobile phone bill, buying a house or car, or starting your own business, having a history of regular payments will make these things much more achievable.
2. Take ownership of your credit profile
If you are like most people, you probably won’t check your credit score until you are getting ready to apply for a credit card or loan. It is easy to neglect your credit score, but it is something that you should be aware of. It’s important to have a sense of how a prospective issuer would view your qualifications. The first step is to consult your credit report. Whether it’s good or bad, it’s better to know your credit score than to have no idea where you stand.
3. Only apply for credit when you need it
Many people don’t realise that making applications for credit can actually harm your credit score. If you make a lot of applications for credit within a short period of time, this can make you look desperate to credit providers, and negatively impact your score. The smartest thing to do is shop around, figure out what deals you can get, target the one you want, then make the application.
Another thing to note is to be careful when shopping around for credit, every time you request credit and are rejected it is recorded on your file and can lead to questions being asked.
Coming to the end of the year, this is a great time to think about your credit usage and which lines of credit you really need. Is there a credit card you could do without, or a loan you could consolidate, saving you money in interest and fees?
4. Regularly check your credit report
Mistakes can happen, but it’s not very common. Amongst Credit Simple members across Australia, less than 1% have queried something listed on their credit file. We recommend regularly checking not only your credit score, but also your credit history, and asking for anything that doesn’t look right to be investigated.
Even a change of address can have a substantial impact when applying for some form of credit or a loan. If you believe any of your information is inaccurate, contact your credit provider immediately to rectify the issue. For instance, your credit provider may believe you have overdue debt that has not yet been addressed. In this case it’s recommended that you obtain relevant documentation from your provider addressing the mistake. You can then pass this information onto your credit reporting body.
5. Make payments on time
It’s pretty simple – the more on-time payments you make, the better your credit rating will be. Paying bills late may result in a default in payment being recorded on your credit file, which could stay there for at least five years. Don’t let something progress to the point of a collection agency, or you could spend years restoring your credit reputation.
6. Get ready to negotiate
Now that comprehensive credit reporting (CCR) has been implemented in Australia, credit providers have to record positive credit information on your credit file, like making loan and credit card payments on time (as well as the negative information that has been recorded to date). Having a ‘good credit reputation’ can help you to negotiate a better deal when looking for a loan and will help off-set any blemishes on your credit file, like a few missed payments. CCR means that it’s more important than ever to be on top of your credit file and credit score, so that you can make sure that both the good and the bad are recorded.
Lauren is Credit Simple's resident content guru, bringing you tips and tricks to help you take control of your money and find financial freedom.All stories by: Lauren Quinn