Your Credit Score What Can Affect It
Your credit score or credit rating is one of the most important factors in your financial life. We are going to look at some of the things that can affect your credit score and some of the things that you may be able to do to improve it.
Firstly, let’s take a look at the things that can have an impact on your credit rating.
1.LATE PAYMENTS AND MISSED PAYMENTS
Making sure that you pay everything on time is probably one of the most important factors in maintaining a healthy credit score. Missed payments and consistent late payments can result in additional fees and negatively impact the interest rate you may be charged. It is not just your credit card and loans that you need to pay on time, your phone bill and utility bills will also show up on your credit history if they are not paid on time.
2. MAXING OUT YOUR CREDIT LIMIT
Do you have credit cards? Are they maxed out? Most online resources will tell you that using your credit over the 50% mark will start to affect your credit score. Try to keep the spending between 10-30% if you can.
3. APPLYING FOR BALANCE TRANSFERS
Every time you apply for a balance transfer to pay off a credit card debt, an enquiry is made on your credit report. If you need to do this, it can show the borrower that you are unreliable at paying off your debts and may not be able to meet the requirements to pay off a loan.
4. CLOSING A CREDIT CARD WITH GOOD REPAYMENT HISTORY
Often, we just don’t want that credit card anymore so we often think that the best thing to do is to close it down. But bear in mind that a credit card with a good repayment history may help your credit score.
5. APPLYING FOR TOO MUCH CREDIT AT ONCE
Any application made for a credit card or loan will have an impact on your credit score. Making several credit or loan applications with different lenders, within a short period of time, can make you appear desperate for credit and may negatively impact your credit rating.
6. CHANGING YOUR NAME
If you happen to get married or divorced it is important to notify your financial institution of the changes that have been made. This will limit any mistakes being made on your credit report. Whilst credit reporting is kept separate sometimes the actions of your spouse can impact your credit score. Unpaid joint bills and unpaid joint credit cards are often the biggest culprit.
There are plenty of free on line tools out there that can be used to keep track of your credit score. It’s always good to check these regularly as inaccuracies can appear on your credit score. It’s always best to catch these as soon as they arrive.
If you are wanting to improve your credit score there are some things that you can do to help increase it and they include:
- avoiding late payments on bills
- making loan repayments on time
- paying off any defaults you may have
- avoiding applying for credit too many times over a short period
Here at Lime Mortgage Brokers we want to help our customers and we are always here to assist you with you needs. So, if you have any questions that you may like to ask in relation to this article please do not hesitate to get in contact with us.
“our knowledge and experience is yours”
Shawn Swart
shawn@limemortgagebrokers.com.au
0415 761 799
The information contained on www.limemortgagebrokers.com.au website and posts is for general information purposes only. Lime Mortgage Brokers assumes no responsibility for errors or omissions in the contents of this publication. The information we provide may not be relevant for all individual circumstances. You should always seek professional advice before you take action in relation to any of the matters in this publication.
