Your credit score is like your seal of approval. A good one can help you find a home loan or property investment, while a poor score can haunt you for years, setting you back in terms of time and money.
The majority of Australians use their credit scores to negotiate a better deal with lenders – seven in 10 of us, according to Veda.
2.1 million Australians are playing a dangerous game with their credit history
Much like any form of reputation, your credit history can take a lifetime to build and a moment to destroy. In fact, Veda found that 2.1 million Australians are playing a dangerous game with their credit history, with 13 per cent of us considered “at risk” from credit default this year.
Even more concerning is that 601,380 people are considered highly to extremely risky in terms of their credit scores. It’s likely that they will find times tough if they let their score slide, setting their financial planning projects back significantly.
So, how can you improve your credit score to prevent getting a seal of disapproval? Here are three tips:
1) Be vigilant with your bills
It’s likely that you’re one of the 97 per cent of Australians who use a mobile phone, which according to Enhanced Media Metrics Australia is the case. It means you’ll probably have a mobile phone plan, and pay a bill each month – at least you should.
Be sure to stay on top of this – as with all your bills – and your credit score will begin to improve. If you can set up direct debit to automate payments, consider doing so to avoid any lapses in concentration that could ultimately damage your score.
2) Get a credit card – and pay it off
The words credit card can be enough to make some wince. It can no doubt be a means of temptation to buy more than you can afford and stick it on the plastic, but should you manage your repayments well, you’ll start to build your credit score.
Paying off your credit card bill on time will be seen as positive credit behaviour, so be vigilant and savvy with your purchases.
3) Keep your accounts open
When possible, try to keep your bank accounts open for as long as possible, as doing so will extend the life of your credit history – something that’s factored in when it comes time to borrow.
Later in life when you’re looking at a mortgage in the Whitsunday Shire, it will give your lender a good record to look at. Whether they see positive or negative history is up to you.