It may not happen overnight, but little by little you might find your once stellar credit score dropping as life happens. Making a late payment by accident (or because you had to) or putting too much on your credit card might seem like temporary problems, but if your credit turns sour it can impair your future financial success.
Monitoring your credit score and making sure no blemishes end up on your credit report is an important part of “adulting” and will help you know when you will be able to do those big deal things like buying a car, getting your first house and more.
But if you recently discovered your credit score isn’t quite where you’d like it to be, or perhaps you’ve been trying to hide from the fact that your score isn’t anything to brag about, then you should read on for some tips on how to help get that score bumped back into the “good” or “very good” categories.
Check Your Credit Report Carefully
Sometimes when you review your credit report you’ll find there is a mistake that is dragging your score down. It’s important to get those fixed quickly and properly. So when you obtain your report, make sure to go over it with a fine tooth comb to ensure that everything is accurate. Look for errors on your personal information, mistaken defaults, old defaults or incorrect details in your credit history.
If you find an issue on the report, then you need to notify the credit reporting agency (Equifax, Experian or CheckYourCredit.com.au) in writing. The agency then will check the information you provided and will fix your report if the information and supporting documentation provides the proof necessary. Keep track of your report and once a mistake is fixed, then you should see a jump in your credit score.
Autopay Your Bills or At Least Pay on Time
Always, always pay your bills on time. Even if you have to work out a payment plan with the electric company or only pay part of your credit card bill, it’s better to pay on time than have an ‘over 30 days’ note on your credit report. If you’re having problems making a payment, call the lender or company in question and appeal for a hardship extension or work out a different repayment plan.
It might be as simple as changing your due date to the day you get paid, or setting up an average billing arrangement with your utilities so it makes your bill the same amount every month. Whatever the case, it’s better to protect your credit rating rather than just not pay a bill.
If you happen to be forgetful or just find juggling all the due dates is tough then consider putting as many bills as you can on autopay. That way it comes out of your account on the exact day it’s supposed to and is never late. You just need to remember this and make sure there is plenty of money in your account to make the payment.
Avoid Negative Listings
Take note of the ‘paying bills on time’ tip here. If you go over 30 days late, it will show up on your credit report, and it will stay there for five years. That hurts your credit rating for a long time!
But there’s more to just late payments when it comes to negative marks — you want to avoid writs, judgments, bankruptcies and clearouts. These situations stay on your report for up to seven years !
So even if you find you have been billed for something you didn’t buy, it’s better to pay for it first if the due date comes up before you finish disputing it and then have it reimbursed. You don’t want to risk a mark on your credit report that you later have to dispute as well!
Don’t Have Too Many Hard Credit Enquiries
As you are working on fixing your credit score, don’t go out applying for a bunch of loans or checking for the best deal. Always be sure of what you’re doing when you agree to a hard credit pull — meaning an enquiry of your credit report from a lender, not when you request your own report. Each hard enquiry wipes a few points off your credit rating, and lenders often see too many enquiries as a cry for help (i.e. you need money desperately!).
Time is an important element of this process too. So if it’s been a few years since you’ve had hard enquiry, it looks better than if you have several in the more recent past. That’s why if you’ve been turned down after applying for credit, then take some time before you apply elsewhere.
Build Up Good Credit
The best way to improve your credit score is to create a good credit history by carefully managing your money. You’ll to do a few things to start down this path:
- Make a monthly budget that you can stick to
- Don’t miss any payments or pay late
- Don’t apply for any unnecessary forms of credit
- Monitor your money and your credit report
By paying your monthly bills on time and paying down debt (and hopefully getting rid of it!), then you’ll find that your credit history will help improve your score over time.
If you find that it’s hard to manage debts or juggle all the bills, then it might be a good idea to look into a debt consolidation loan that help you make only one payment. This way you’ll find that it’s easier to manage your monthly budget, and you’ll know when you’ll be out of debt. Both are excellent things to do when looking to improve your credit rating.
Check out Swoosh’s online application for a personal loan that could help you not improve your credit score but also rid of you of those nasty debts. So go ahead and put yourself on the road to financial freedom!
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