Your credit score is more than just a number. It is a reflection of your financial health, representing your creditworthiness to lenders. A high credit score not only helps in securing loans or credit cards, but it can also determine the interest rates you’re offered – including your mortgage rate. If your score is low, you might end up paying thousands more in interest over the life of your loan. Fortunately, there are several practical steps you can take to improve your credit score:
- Pay Your Bills On Time: This might seem obvious, but timely payment of your bills is crucial. Late payments can have a significant negative impact on your credit score. To ensure you don’t miss any payments, consider setting up automatic payments or reminders.
- Keep Your Credit Utilisation Low: Credit utilisation is the ratio of your outstanding credit card balances to your credit card limits. High utilisation can indicate to lenders that you’re reliant on borrowed money, which can negatively impact your credit score.
- Regularly Review Your Credit Report: Mistakes on your credit report can lead to a lower credit score. Be sure to regularly review your report for any errors, such as incorrect account statuses or false late payments, and dispute these errors if you find them.
- Diversify Your Credit: Having different types of credit (credit cards, retail accounts, instalment loans, mortgages, and auto loans) can benefit your credit score. However, this doesn’t mean you should apply for credit you don’t need – always ensure you can comfortably manage and repay any credit you take on.
- Limit New Credit Inquiries: When lenders or credit card companies check your credit report because of an application, it can cause a small, temporary drop in your credit score. Try to only apply for new credit when necessary.
Improving your credit score doesn’t happen overnight, but by following these tips provided by our mortgage brokers and being consistent in your financial behaviour, you can gradually increase your score. A good credit score can open the door to better interest rates and more favourable loan terms, saving you significant money in the long term.
Start working on your credit health today for a more financially secure tomorrow! If you need more guidance, please get in touch.
Arranging finance can be stressful, especially with some lenders now taking extra steps including going through your living expenses and credit scoring (ouch!). And sometimes banks can make you feel like ‘just a number’. That’s why we want to do things differently: because you deserve better.
As a local family-owned business, our team takes the time to listen, answer your questions and make getting your home, car or equipment loan as easy as possible.
