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Welcome back everyone. In the sixth and final part of my blog series, I want to discuss something that affects all of our financial journeys: Superannuation. Perhaps you’re concerned about your retirement savings? Or maybe uncertain about how to make the most .....
Wealth - 6 min read
How important is your credit score? Believe it or not, your credit score can affect all of these areas of your life:
A respectable credit score is worth attaining. But what can you do if you need to improve your credit score quickly? We’ve got six tips for you.
Monitoring your credit score can help you to detect potential problems. Occasionally, credit reporting agencies make mistakes, and if you spot them early on, you can fix them before potential creditors notice the issues.
Sadly, we all need to watch for identity theft as well. Scan through your accounts and check balances. Your credit report acts as a “paper trail” for accounts opened in your name. If you see a credit card account that was opened in your name, quickly maxed out and then abandoned, take action immediately. Formal dispute processes generally take several weeks, so begin right away for a quick improvement to your credit score.
One of the simplest ways to improve your credit score is to pay your bills on time consistently. According to Experian credit reporting agency, payment history is the most prominent factor in determining your score.
If cash flow problems have interfered with timely payments, talk with your financial advisor about possible improvements. From a lender’s point of view, if you’ve routinely succeeded in paying your bills on time, you’re a safe bet for future loans as well.
A high score reflects judicious use of credit, and one of the measures reporting agencies use is a ratio of available credit to actual debt. If you use most or all of your available credit, you’ll have a high ratio, and this is a red flag.
To improve your credit score quickly, lower your borrowing ratio by paying off some of your debt. Australians use several different reporting agencies, and each agency has its own formula. But generally speaking, it’s advantageous to use less than 10 per cent of your available credit. Therefore, if you have a credit card with a $7,000 limit, keep your balance less than $700.
Remember that glorious feeling you had when you paid off your car? You might be tempted to wipe it off your credit report, but restrain yourself and leave the record there.
Why? As long as your payments were timely and complete, the presence of that old debt is a testament to your diligence and responsible nature. Bad debts that negatively impacted your score are eventually dropped from your credit report, and that’s a good thing. But leave the “paid in full” accounts right where they are.
The credit agency Equifax recommends only applying for credit when you need it. Making several credit applications within a short period can drop your score. So if you’re looking for ways to boost your numbers quickly, put a halt to applying for credit.
Instead, make wise use of the credit you already have. For instance, instead of signing up for a credit card at a store offering a promotion, use one of the credit cards you’ve had for a long time. And then pay off the balance as soon as possible.
Two types of inquiries can be made into your credit: hard and soft. Soft inquiries, which include your personal credit checkups, don’t negatively impact your score. Hard inquiries, on the other hand, can negatively impact your score for 6 to 12 months.
Hence, you’ll want to minimise hard inquiries and time them carefully. These queries include applications for credit cards, mortgages, car loans and personal loans. If you plan on applying for a mortgage in a year, minimise your hard inquiries in the meantime. And when you shop around for mortgages, avoid giving multiple lenders access to your credit report. Instead, narrow down your options by comparing rates before you allow pings to your credit.
To learn more about improving your credit score, or to discuss borrowing details with our lending experts, reach out to us at Altus.
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Altus Wealth Pty Limited ABN 55 649 956 212 is an Authorised Representative of Altus Financial Services Pty Ltd ABN 24 637 026 825 an Australian Financial Services Licensee (AFSL no. 520266). Altus Financial Services Pty Ltd is not responsible for the advice, products and services provided by Altus Accounting. Julie Azzi is a credit representative (CR No. 366834) of BLSSA Pty Ltd ABN 69 117 651 760 (Australian Credit Licence 391237).
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