Whether you’re looking to secure finance for personal or business reasons, knowing your credit score and how it may shape your financial future is central to any financial decision. However, very few of us know our credit score or have actively tried to improve it, and this is an issue.
New research commissioned by finder.com.au asked over 2,000 Aussies what they think of their credit score and found that 82% of Aussies have never attempted to correct their credit score and 20% of Aussies don’t know how.
Of those who did try to improve their credit scores, the majority (56%) decided to increase savings to repay debt, while 27% consolidated their debt into a 0% balance transfer card.
Interestingly, Millennials were the most likely to improve their credit score with 34% having made a move to improve their number. By contrast, just 17% of Gen X and 10% of Baby Boomers had made a conscious effort to improve their credit score, which is quite alarming.
It may only seem like a number, but your credit score can have a big influence on your capacity to be approved for finance. A good credit score could be the difference between getting a discounted interest rate on your mortgage or the ability to get a line of credit or personal loan to help fund an emergency medical expense.
Here are 4 practical tips to improve your credit score:
- Check your credit score frequently. Reviewing your credit score on a regular basis will help you monitor your financial health and decide if you need to make any changes to your behaviour. For instance, if you have a bad credit score due to a default listed on your file, then you may decide to lower your credit limits. Checking your score also gives you an opportunity to ensure all listed information is correct. Checking your credit score doesn’t have to cost a thing, and you can check it as often as you like (without it affecting your score).
- Pay your bills in full and on time. Getting into good financial habits such as paying your bills and meeting repayments on time can help you build a good credit history and credit score. Missed or late repayments for products such as credit cards or your home loan, or for services like utilities, can hinder your credit score. If you’re struggling to meet several debt repayments, consolidate your debt into a single repayment.
- Redirect your bills when relocating. To avoid your bills being listed as defaults when you move house, notify your bank and other providers so that your bills and communications are redirected to your new address.
- Don’t over-apply. Applying for several loans in a short space of time can negatively impact your credit score as lenders will see several marks against your name and they may assume that you’ve been rejected for multiple applications. As a result, they’ll be reluctant to lend to you as they’ll be concerned that you pose a high credit risk.
Your credit score is a metric used by lenders to decide how favourable you are as a borrower. It’s generally a number that ranges from 0 – 1200. The higher the number, the better your credit outlook.
Many borrowers in Australia and around the world have limited knowledge of their credit score which could be preventing them from locking in good financial deals that could be saving them thousands of dollars. Be proactive about improving your credit score so that you can enhance your financial wellbeing.
About the Author: Bessie Hassan is the Money Expert at finder.com.au — Australia’s most visited comparison website — and is a highly regarded media commentator who often appears on radio, TV and throughout online publications sharing her advice and best money-saving hacks. She can be reached at finder.com.au
Courtesy of Finder.com.au