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How to improve your credit score
Having a healthy credit score can help you secure a favourable borrowing rate for credit products to help you with life’s big purchases. However, having a healthy credit score is not the case for everyone, so what exactly can you do to help improve your credit health?
Unfortunately, there is no ‘quick fix’ or shortcut when it comes to improving your credit score. It takes time to improve your credit score and requires you to maintain a healthy credit history. Luckily for you, Credit Savvy members can access their credit score and Credit Report Summary for free and can easily review the key categories that impact credit scores.
The more recent an entry on your credit file, the greater impact it is likely to have on your score. Each type of information has a set time period that it can hold on file (credit enquiries for example, are held on file for a maximum of 5 years). So, time can be an important factor in credit scores, especially when it comes to negative events such as defaults.
While we can’t speed up time, or turn back the clock, below are a few key actions you can take that may improve your credit score.
Make all your repayments on time:
This demonstrates good financial responsibility and with the recent changes in Comprehensive Credit Reporting (CCR), the minimum payment amount and payment date on which you pay may be listed on your credit file and impact your credit score.
Borrow only what you can afford to pay back:
Make an honest assessment of your finances and be sure to consider all of your financial obligations, including any Buy Now, Pay Later accounts you may have.
Limit the number of credit enquiries/applications you make:
Multiple credit enquiries in a short time frame can lower your score. Research the credit products available in the market first, read the appropriate product information and only make the application once you are sure they suit your requirements and financial situation.
Build up your savings:
Having a buffer as a ‘just-in-case’ not only gives you reassurance if the unexpected happens but can help with your credit score by giving you the flexibility to always pay your bills on time.
Make informed decisions when applying for credit:
Consider what type of credit you are applying for, who the credit provider is, and the impact this could have on your credit score. For example, payday lenders may be viewed less favourably than banks.
Actively monitor and check your credit file:
Ensure you keep a close eye on your credit file for errors, making sure to alert providers and credit reporting bodies if you believe the information they hold is incorrect.
Finally, it does help to understand the key elements that influence a credit score. We have you sorted with our article that covers how your credit score is calculated.
Now that you know the basics, log in below to access your free credit score and take the next step on your financial journey! Not already a member? It’s simple, easy and free to sign-up!