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How to improve your credit score

How to improve your credit score

A bad credit score can have a significant impact on your borrowing options and financial reputation. While your score may currently be bad, it doesn’t have to stay that way. You can improve your credit score and financial future.

Firstly, you need to understand what a credit score is and how it gets factored into your finances. A credit score (also called credit report, credit file, credit rating) gives lenders a snapshot on how responsible you are with your money and your credit. If there are defaults (missed payments) or other negative items on your report, these will make your score go down, resulting in either loan denials from lenders, or an approval with a higher interest rate. This can cost you more money now and across the life of any loans or credit cards that you may have.

Here are 6 ways you can start improving your credit score.

  1. Know your credit score!

    You may know its bad, but do you know exactly how bad? You need to have a starting point to go from if you are going to set a goal for improvement. To find out more about your credit report and the potential finance options available, visit: My Credit Options

  2. Set a goal

    If you’re trying to get out of debt or planning to make a big future purchase like buying a home, set a credit score goal in line with your financial plans. Having a clear cut goal can help you overcome difficulties, make sacrifices and strive towards achieving the financial success you desire.

  3. Fix what you can easily fix

    If you find inaccurate information on your report, make sure you try to get it corrected. If you have been late on payments, make a plan to get your accounts caught back up so your report can start reflecting a more positive payment history. Keep the balance on your credit cards low, and pay it off rather than just moving it around. This demonstrates you can manage credit cards responsibly, and showing this with consistency over a period of time will help. And be cautious about applying for and opening new forms of credit unless really needed.

  4. Negotiate terms

    If you find you can’t get caught up at this time due to a financial hardship, call your lenders to see if you can negotiate lower rates or a payment plan to help get you back on track.

  5. Continue to check your credit report and score

    Continuing to check throughout the year so you can see the improvements you are making reflected in your score. Seeing better results will encourage you towards your end goal and you’ll be able to spot any inaccuracies to fix along the way.

  6. Debt management help

    If your debt continues to spiral out of control even after applying these points, it may be worth considering a debt agreement. A debt agreement is a legally binding agreement between you and your creditors that can reduce the total amount of your debt, freeze all interest, set terms you can afford to repay; providing a way out of debt. It will be listed on your credit file, but if you’re at the point where lenders will no longer lend to you, it may be the solution you need. For more information read: Debt Agreements – what you need to know.

Safe Debt Management has helped Australians from all walks of life recover from crippling debt. So, if your debt has become unmanageable, we’re here to help make your life better. To find out how we can help you take control of your debt, book a FREE debt assessment today — what have you got to lose, but your debt!