Everyone should get it into the habit of boosting their credit score whenever they can. It no longer just impacts whether you can get mortgages, credit cards and loans, it will also affect your mobile plans, your monthly car insurance, and more. In a nutshell, a credit rating is an indication of how a typical lender would assess you. Here’s what you need to know about credit checks and how to improve your credit score.
1. Understand your credit score
It’s hard to know where you start if you don’t know where you currently stand. Credit bureaus such as Illion and Equifax can provide you your credit score in the form of a dial that shows you how far away you are from a perfect credit rating score.
There’s also your credit report, which contains the actual loan records that a credit bureau uses to calculate your credit score. On that report you can see exactly what you did right and exactly what’s deducting it.
There are other credit bureaus in Australia and you can request your credit score and report from any one of them.
2. Dispute any errors
If a default comes up on your mobile phone bill, however you know you have never defaulted, you can request an audit with the credit bureau, or the phone company itself, just like you would to any lender. They will investigate the errors and remove the negative impact if they find there was a mistake.
You can raise this with their External Dispute Resolution (EDR) scheme, or with the Office of the Australian Information Commissioner (OAIC). You can request them to contact the credit provider on your behalf to have the information re-evaluated.
3. Fix your payment mistakes
We tend to overlook small bills, but make sure that you look through your credit report and find out if there are any late payments that you might have forgotten about.
If you have an overdue payment of at least $150 for more than 60 days, your lender can report it as a default. It can stay on your record for five years, so it is wise to always be responsible with your payments no matter how insignificant they are.
4. Pay your bills on time
Now that you have made an effort to fix any errors and taken action to minimize any further damage, it’s time to start building your credit score back up again. The good news is that any new credit reporting in Australia always rewards you whenever you’re paying the minimum amount on time. One of the easiest ways to do this is to set up direct debit to avoid any late payments. This is to make sure that you make your payments on time, and watch your credit rating start to climb back up.
5. Stay credit active
Lenders always look into your financial activity, and how responsible you are with finances. The best way to show your responsibility is to have a healthy amount of debts while keeping up with your payments. Having debts such as business and personal loans will boost your credit score if you can manage them well.
Others, like credit card cash advances, can lower your score temporarily. However, if you pay them on time they can serve as a good stepping stone toward the more desirable loans and your score may eventually increase to be even higher than before.
Fixing your credit score is easier than you think
Not everybody owns a perfect credit rating, and we all struggle to find ways to improve it. In Australia, positive credit reporting is happening right now, and people are fixing their credit score even without realizing it. There’s no better time than now to take action for your future.
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