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How to Take Control of Your Credit Score

Published on Thursday, July 04, 2019

How to Take Control of Your Credit Score

If you’re planning on buying a new car through finance, or you’ve finally saved up enough money to move out of your parents’ house and apply for a mortgage, then you need to start building a good credit score. 

Your credit score is essentially a bunch of statistics based on all your financial decisions and hiccups over the last 6 years. In today’s world, it is all too easy for banks to access this report. This makes it all too easy for them to reject your loan application based on a few regretful money mishaps.

According to financial experts Empowered Finance, “This is because lenders believe they might be taking a higher risk when lending to you. This means your loan application will either be flat out rejected or you will be expected to pay a much higher interest rate.”

In an age of million-dollar house medians, high-interest mortgages and an increased cost of living, it’s easy to believe you will never get on top. But it’s very possible and it can start with simply improving your credit score. So, if you want to apply for a mortgage or just for your first credit card, here are a few simple, yet effective ways to help manage and improve your credit score. 

● Check Your Credit Report and Score Regularly

The first, and most important step you should be taking is checking your credit file routinely. There are many ways you can do this that don’t involve complex statistics. Our website Credit Simple is a good place to start as it provides you with your credit report in an uncomplicated format.

This will give you a great overall picture of how the banks will see you and where you can improve on your finances. Regularly monitoring your score will also inform you of the best time to ask your bank for money. The risk of being denied will decrease as you won’t be heading into your bank blinded and unaware of your financial situation. 

Monitoring your credit report is also important as it helps you catch on to a fraudulent activity that could possibly affect your score. Make sure to check your file carefully and report any mistakes that were a result of identity theft, stolen credit cards, etc. It is important to not be blind to these crimes because it happens more often than we think. 

Legal experts Southern Coast Lawyers state that “the introduction of online purchasing has seen a rise in not only the opportunity for fraudulent activity, but a new level of scamming technique too.” 

These crimes, if left unreported, can drastically drag down your credit score. Being aware that fraudulent activities happen, and staying on top of it, will help you take control of your credit score. 

● Stay Organised and Pay Your Bills on Time

The leading factor in determining your credit score is your payment history. Skipping a few payments or paying your credit card bill late may not seem like a big deal, but in the long term, it will negatively affect your credit score.

Even if you’ve paid everything off, these little blemishes can linger on your credit report for up to six years. Banks want to see that you’re reliable and organised, that is why it’s important to pay your bills on time, every time. 

The best way to ensure your bills are paid on time is to have them all set up with direct debit. This will confirm the money comes out of your account on time, and all you need to do is make sure the money is in there.

Keep track of what is coming in and out of your account by setting weekly reminders on your phone, writing it in your work diary, putting post-its on your bathroom calendar. Write them all down. 

Your phone bill, insurance, car repayments, gym membership. Sit down at the start of each month and figure out when your bills are coming out, what day you’re getting paid and then organise your money accordingly. Setting up weekly budgets will adequately prepare you to pay your bills and stop you from overspending. 

Paying all your bills on time drastically improves your credit score and this gives lenders little reason to not see you as a good loan candidate. While learning to embrace money saving tips can help make the process even simpler.

● Limit Your Credit Applications and Enquires

This isn’t commonly known, but just applying for credit and not even following through with it can have a negative impact on your credit score. Applying for a few accounts over a short period of time due to some financial troubles could see your credit score drop. 

Even if you were able to bounce back and pay off your debt quickly, a high number of applications in a short time can make you appear desperate to lenders.  

According to the short term finance experts Maxiron Capital, “the smartest way to avoid credit applications damaging your score is to shop around for the best deals and comparing them carefully. Choose which one suits your financial situation the best and then make the application. Avoid making quick decisions and applying for every credit card you see just because you are low on cash.”

Making informed and thought-out financial situations will undoubtedly make your credit report and score more appealing to banks. 

● Don’t Cancel Your Well-managed Accounts

Credit age is another primary factor that contributes to your overall credit score. According to business coach Renee McDonald this refers to the “number of credit lines you have open and in good standing and the length of time they are open. The older the accounts, the more it helps your credit score as it shows lenders a long record of successful financial management. So, because of this it would be beneficial to avoid closing your older accounts unless absolutely necessary.” 

Keep your well-managed accounts open, use them once a year, pay them off immediately and slowly but surely improve your credit score. 

Author Bio:
Julian Parsons is an Australian writer and a business administration student living in Sydney. He is passionate about financial data and project management. Julian enjoys photography and when he’s not studying or writing, you’ll find him outdoors capturing shots of nature.

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