5 Things you can do to help your credit score
Author: Auto Loans Group
If you have a bad credit score, you’ll find it hard to get finance on the best possible terms. A credit score is also known as a credit rating.
The three main ways you can get a bad credit score are by:
1) making your credit repayments late,
2) not making your credit repayments at all (defaulting), and
3) making unsuccessful credit applications.
This information is compiled by credit reporting agencies. Lenders check your credit score when you apply for credit.
How can I find out my credit score?
You can find out your credit score by contacting agencies like Experian and Equifax. You have a legal right to access this information.
Credit scores can range from -200 up +1200. The higher the score, the better. If your credit score is less than 500, you’ll find it hard to get approved for any credit at a good interest rate.
How can I improve my credit score?
Here’s our top 5 tips for improving your credit score:
1. Pay any overdue debts ASAP
This is a no-brainer. It will also improve your financial situation. Do up a budget and itemise your income and expenses. Split your expenses into essential and non-essential. Cut or minimise any non-essential expenses. This will give you the money you need to start paying your overdue debts.
2. Start making all your credit repayments on time
Since Comprehensive Credit Reporting was introduced in Australia, potential Lenders can see whether you’ve paid your loans and credit cards on time. It’s important to understand that your credit score is affected by all forms of credit. Did you know that mobile phone plans and electricity accounts are forms of credit? You have access to those services in return for paying your bills on time.
Organise direct debits from your account to make sure all your debts and bills are paid on time.
3. Organise a revised repayment plan with your credit provider
If you’re struggling to make your debt repayments, talk to your credit provider. It’s in their best interest for you to repay them. They may accept a revised payment plan with lower repayments that are easier for you to make.
If you have several debts, they may also be able to refinance those debts into a single loan for you. This will make it easier for you to manage your repayments.
4. Get a stable address and put yourself on the electoral roll
Lenders like transparency with your contact details. They’ll want to know how to get in touch with you.
5. Don’t make any unsuccessful credit applications
Every unsuccessful credit application that you make is likely to hurt your credit score. Don’t even bother applying for credit if you already have overdue debts. Many Lenders may not be an option for you at all, if you have a low credit score.
How we can help
If you’re worried about your credit score and you’re looking to buy a car, talk to us. We’re finance brokers. We can tell you on which lenders are most likely to approve your application, based on your unique borrower profile and credit score.
We can also tell you on which lenders to avoid. These are the ones that will be likely to reject your application. It’s important to understand that an unsuccessful loan application is likely to damage your credit score further.
Don't use dealer-arranged finance or try to arrange a car loan yourself either. If you do, you’ll typically end up paying a lot more.
Call 1300 301 051 during business hours to speak with one of our experienced brokers.
DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.