How to Improve Your Credit Rating
Have a poor credit history? No worries; it is not too late to improve your credit score. Having a good credit rating has an impact on your ability to take loans, mortgages and borrow money from credit card. Lenders base their decision about whether it is beneficial to them to let you borrow money and the amount of interest that they can charge you with. Do you want to have a fast approval for credit cards or obtain a huge loan at minimum interests? Read on to know how to improve your credit rating.
- Do not procrastinate bill payment
Sufficient emphasis can never be laid upon this point despite being so obvious. It is simply too crucial to make timely payments of your bills. What may seem like a minor overdue payment initially is actually there to stay on your credit report for years to come so beware before you think about delaying payments any further.
- Get rid of balances on your credit card
If you want to improve your credit rating, it is high time that you start paying off the balances on your credit card . The balances on your credit cards have an impact on your credit rating. It is better to make expenses on a single credit card than multiple cards if you want your credit report to be sound – you definitely wouldn’t like the balances on separate cards smear your record.
- Keep your credit account active
If you have an account that doesn’t have a solid credit history, the lenders will not be interested in letting you borrow. Lenders want to have a closer look at your past records to analyse your repayment and borrowing patterns. Not having a credit history could point out in the direction that you are probably not a reliable borrower so automatically, you name will be on top of the high risk borrowers in the eyes of the lender.
- Raise the credit limit on your card
This can get tricky. Only ask your creditors to increase your credit limit if you are certain that you will not increase your expenses according to it. If you do not amend your old habits, your credit history will again suffer negatively.
- Steer clear of “hard” credit enquiries
Hard credit enquiry refers to when the prospective creditor makes an enquiry upon your credit report. This happens every time you apply for credit, regardless of its form. Each time there is a hard enquiry made on your credit report, there is a deduction of a few points from your credit rating. You may wonder why this has a negative impact. It is because the lenders may think that you are not capable of managing your personal finances well and are always in need of credit desperately.
In Australia, credit rating is maintained by an organisation called a credit bureau. Your credit score may already be compiled if you have a utility account in your name, own a credit card, have an active phone service or have applied for a loan in a bank. Making a soft enquiry about your credit rating report regularly is important. You may want to be on top of your game when you are applying for a loan, so just call at the credit bureau and inquire about your report. Review the report thoroughly and ascertain that it is devoid of errors.
Disclosure: “The owner and operator of Market Mad House received financial compensation for this post.”