5 Things People With Good Credit do Regularly

Does anyone actually have a good credit score? Is it difficult to have a good credit score? We dive into all things credit score and uncover the routine habits of those with good credit!

A good credit score is vital since it influences your borrowing power. Lenders use the term “borrowing power” to describe the amount you may be able to borrow based on your credit history. A high credit score may even impact the interest rate you pay.

Your credit history is based on your credit behaviour over some time. So, improving it will take time and requires you to stick to healthy spending habits. We will explain how to build a healthy credit score from people with good scores.

1. Know what your credit score is and check it regularly

Knowledge is power!

Knowing your credit score is a good first step because it is a simple habit to start. Your credit score can help you negotiate your interest rate or figure out why a loan has been rejected. Your score may change over time as you change your credit behaviour. This behaviour can include applying for loans, taking on debt, or if your repayment behaviour changes.

You should practice checking your score regularly. This will allow you to see if you are making any progress. Checking it regularly will also help you spot any inaccuracies or errors. While credit providers and credit agencies are required to take steps to ensure accuracy, there is still a chance that it may contain errors. Ensure that there are no late repayments that are incorrectly noted and that the credit limits for each account are correct. If there are errors on your file, this may impact you when you apply for a loan in the future.

2. Pay your credit on time

Your credit health is evaluated by credit providers based on how well you manage your debts – and you can keep it healthy by ensuring your repayments are timely by the due date. People that can demonstrate good credit-based behaviour (such as repaying debt on time) may now see their credit score reflect this. It may give people more power over how lenders will see their applications when reviewing their credit file. This could also allow people to recover from adverse situations (such as losing your job) or to establish a credit history more quickly.

Personal credit is becoming increasingly detailed and smarter with Comprehensive Credit Reporting (CCR). These credit reporting changes in Australia can give lenders a more accurate picture of your credit. These changes may make it easier or harder to get credit for a loan. This new system means that if you miss repayments or make late payments, this can show up on your report.

At Debt Fix, we will take the time to calculate the most comfortable repayment term for you, so you do not risk paying late fees and further interest. You should also think about a schedule that works best for your situation. You need to be able to commit to paying off the debt, whilst also being comfortable enough to pay your other living expenses and saving as you pay off your debt.

3. Do ample research and only apply when you need it

Too many credit applications may adversely affect your credit score. Whether or not your loan is approved, a lender’s enquiry regarding your credit will be recorded on your credit file. Too many inquiries in a short space of time can negatively impact your score and may raise a red flag for other lenders. Lenders are cautious because it may give the impression that you are overstretching yourself financially or that you were unable to successfully obtain credit. When researching the market, compare the fine print and ensure that you meet the eligibility criteria.

4. Understand how applying for different credit impacts your credit score

Enquiries for different types of loans, with different lenders can impact your credit score in different ways. Home loans, personal loans, and credit cards impact the Credit Reporting Body’s algorithm. Enquiring with a payday lender may be viewed less favourably than one with a bank.

5. Look into getting their free credit report

You are entitled to a free credit report in Australia, once a year from each of the Credit Reporting Bodies. This process can be manual and may take longer than a week, but it may be worthwhile to check. You may need to request a copy of your credit report from each body because they might hold different information.

At Debt Fix, we want to help all Aussies on their journey to financial freedom. If you want to talk through all your options with a financial expert, contact us today! It all starts with taking that first step to navigate yourself out of poor credit, with a confidential, no-obligation discussion with our friendly team.