How can I improve my credit rating?

How can I improve my credit rating? Close up shot of three credit cards stacked on top of one another on a desk.

How can I improve my credit rating?

How can I improve my credit rating? 

Understanding credit ratings and their significance is important, especially if you have a credit card or a home loan set in your sights at any time in the future.

Whether you are looking to gain a better understanding of credit scores or you’re looking for the best ways to improve your credit rating, we’ve compiled all the information you need to know.

Keep reading ‘how can I improve my credit rating?’ to find out more.


Where do credit ratings come from?

Equifax, Experian and Illion are three of Australia’s largest credit agencies.

Each of the three has their own way of calculating a person’s credit score, though are similar in their scoring system.

Typically, each individual will be given a credit score between zero and 1,000 to 1,200. The rating is then used to tell lenders how trustworthy you are and how likely you will be to pay back the money you have borrowed.

The higher your credit score, the less of a risk you are to the lender and the more likely you will be to secure a larger loan amount.

Your credit rating is calculated using all of the information on your credit report and is an important indicator of your credit health.


Why it’s important to have a good credit rating & understanding credit ratings

A good credit rating is normally between 500 and 755 with the best credit rating between 800 and 1,200.

In general, the higher your credit score, the less of a risk you are to a lender. This means you will have a better chance of credit card or loan approvals.

It is also important to have a good credit score when you are competing for a loan at a more attractive rate. The better your credit score, the more attractive you will be as a borrower and the more likely you will be approved.

A poor credit score, normally anything below 500 will make it more difficult to secure approval on a loan or credit card. This is why it is critical to understand the things that impact your credit score.


Things that impact your credit rating and how to improve it

Your credit score is based on whether or not you pay back the credit you borrow on time. 

Things that can have a negative impact on your credit rating are things like:

  • Consistently paying bills late
  • Credit card debts and failure to make monthly repayments
  • Applying for numerous credit cards or loans at once
  • Closing credit cards that have a good repayment history
  • Short term loans

If you want to ensure good credit health, make sure you are following these basic credit rating improvement tips:

  • Pay all of your bills on time
  • Pay your rent or mortgage on time
  • Manage your credit cards responsibly
  • Lessen the amount of credit on your credit card, so you cannot accrue too much debt
  • Check your credit report for inaccurate information
  • Pay off debts and loans
  • Only apply for new credit if you are sure that you can afford the repayments

Although it can be a lengthy process, it is possible to significantly better your credit rating by following these credit rating improvements tips.

If you need help with your credit rating or you want to talk to a real person about the best ways to improve your credit rating, reach out to the financial experts at Simmons Livingstone & Associates today.

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