It’s important to have a good credit rating when you apply for any finance. Credit can include loans, credit cards, mobile phone/internet plans and services like electricity or gas.
If you have a good credit score, you can usually get finance approved on better terms and conditions.
What is a credit rating?
A credit rating (also called a credit score) gives a lender an idea of the risk of lending you money. Several factors influence your credit rating, including:
- your credit history.
In other words, whether you’ve made your previous credit repayments on time. Lenders record this information with credit reporting agencies. They check it whenever you apply for finance.
- the number of credit applications you’ve made over the past five years.
If you’ve had several unsuccessful applications, it means that lenders perceive you as too great a risk.
- whether you’re on the electoral roll and how often you change your address.
Lenders prefer stability and transparency.
How can I find out my credit score?
You have a legal right to access your credit score through reporting agencies like Equifax. You also have the right to have any incorrect credit information about you corrected. Your credit score affects your chances of finance approval.
Credit scores usually range from 0 to 1200, depending on the credit reporting agency. The higher the score, the better. Any credit score less than 500 is a problem. If your credit score is that low and you apply for finance, lenders will usually either:
- reject your application, or
- charge you a higher interest rate.
Ways to improve your credit score
The simplest way to improve your credit score is to make all of your credit repayments on time.
The two major things you want to avoid are late or missed repayments. Both negatively affect your credit score. You can take simple steps to avoid placing yourself in this position. For example, by keeping your creditors informed of any changes to your:
- contact details (i.e. your physical or email addresses and phone numbers). This will ensure you don’t miss any important payment notices from your credit provider.
- bank account details, so any direct debit repayments of your credit aren’t missed.
If you do find yourself struggling to make any of your repayments, talk to your credit provider. See if you can come up with a different repayment plan before you start missing any payments. It’s in their best interest as well as yours for you to repay the credit they’ve provided to you. Make sure the revised agreement is in writing and that you stick to it.
If you have multiple debts, consider consolidating them into a single loan. But don’t bother applying for additional credit if you have overdue debts. Get up to date as soon as possible.
How we can help
At Wisebuy Investment Group in Newcastle, our experienced and licensed brokers can help you with your applications for residential, personal and commercial loans. We can also help you with asset and equipment finance.
Contact us today for an obligation-free chat! We’ll take the time to understand your individual situation before providing you with appropriate advice. Our focus will be on finding the right loan for your needs from over 60 Australian lenders.