We all like to be given a fair go and it can be a real shock when an application is refused based on your credit score. It is a good idea to check your credit score regularly, know how it is calculated and if necessary, make steps to improve it.
Read more about how to check your credit report and find your credit score for free.
There a number of sure-fire methods to ensure you are not limited by a poor credit score. If you have already had an adverse event on your credit report it is important that you review your credit health and begin to make some necessary changes. Here are the most common ways to improve your credit score.
Check your credit report for errors
A credit score is calculated from your credit report and it is therefore important to ensure that your credit report is accurate. Errors on credit reports could originate from the creditor, credit agency or even more alarming may indicate fraud or identity theft.
To get more information about checking your credit reports you can review the Your Credit Report Factsheet or ASIC's Money Smart website: 'Check your credit health'
Pay your bills on time
Not only does paying your bills on time avoid defaults and late payments being recorded on your credit report but now, because of changes in February 2018 known as Comprehensive Credit Reporting, paying your bills on time will have a positive impact on your credit score.
If you find yourself in the common cycle of getting late payment notices you should consider setting up direct debits, periodical payments or calendar notifications to avoid a negative listing on your credit report.
Avoid defaults, collections and overdue payments!
Defaults and overdue payments, more than $150 and 60 days old can be recorded on your credit report for 5 years.
If you are unable to make a repayment, call the credit provider and request to make a payment arrangement. Ignoring the overdue payment will potentially have severe consequences on your credit score.
If you are having trouble with debt there is some useful information on ASIC’s Money Smart website: 'Help with debts'
Keep your details up to date, especially when moving
Moving house or travelling overseas can often be exciting time but it is a common cause of defaults and overdue payments due to bills being missed because of the change of address.
Always ensure you redirect your mail if you move or head overseas for an extended period. Requesting online bills and notices can also assist you in ensuring you have access to all due payments.
Limit the amount of applications you make
Making multiple applications to multiple institutions will not increase your chances of a successful application. Each time you apply for credit it is recorded on your credit report.
Applications for credit should only be done after careful consideration to ensure you are not overextending yourself with unnecessary debt.
Consolidate and pay down debt
Rather than moving money around, paying down debts and keeping credit limits low can have a positive impact on your credit score. Consolidating several loans into one can also make it easy to manage and make payments on time.
You can enquire now or speak to a Regional Australia Bank Relationship Specialists on 132 067 about consolidating debt to help you get on top of you finances.
Understand credit and become an educated consumer
Firstly, accessing your credit report and understanding your credit score is the first step in taking control of your credit health.
Secondly, always consider if you actually need the credit to avoid getting into unnecessary debt. Ensure you are able to balance the repayments and have money for essentials and emergencies.
Lastly, be very wary of companies who offer services to fix or repair your credit score. These companies will generally charge a fee to work with you to review information on your credit report but remember, you can access your credit report for free and perform tasks to improve your credit score yourself now.
For more information on credit repair you can view the ASIC’s Money Smart website: 'Don't get in a fix over credit'.
Changes to credit reporting – Comprehensive Credit Reporting (CCR)
In February 2018, the information collected for your credit report was changed. Rather than only negative events being recorded on your credit report, Australia’s new credit reporting system will collect positive credit information. This is known as Comprehensive Credit Reporting (CCR) and provides a more accurate overall credit score, as any adverse events are now measured against positive behaviour.
If you require further assistance in assessing your suitability for a loan or credit with Regional Australia Bank please enquire now or contact a Relationship Specialist on 132 067 to arrange an appointment.
For further information regarding credit reports and credit scoring you can visit the following useful pages:
- ASIC's MoneySmart
- Finder (Equifax score)
- Getcreditscore (Equifax score)
