- The Savvy Promise
You finally got around to checking your credit report and it’s not looking good. If your credit report feels like it goes through near-death experiences every month with the multiple transactions and loan repayments that have sucked it dry, or is currently hanging on a drip as you pray that it sees you through till your next salary payment then it’s time for a credit card detox. These five tips will help keep your credit score up and out of the bad credit mark. If you already have a bad credit mark, it’s ok. You can still improve your credit report with these tips.
Know what goes into your credit score
Knowledge is certainly power, and by understanding what makes up your credit score the easier it will become to maintain a good one. What makes up your credit score are:
- Payment history
- Mix of credit
- Level of debt
- Credit age
- Any recent credit you have taken out
Kick procrastination to the curb
You probably heard this tip so many times, but there is a reason why. Changing your behaviour in making late payments, even if its 24hrs late can put a dent in your credit report and stave off potential lenders. Banks such as the NAB charge late payments fees that range from $9 to $15, which can add up over time. One way you can solve this issue is by setting a reminder or using an automatic transaction that will pay off any monthly loan repayments. Even if it is towards paying off the minimum repayment and not the full repayment, make sure that you are on time.
We all fall off the bandwagon
Sometimes making repayments can be hard due to financial restraints or additional payments that popped up that you were not expecting. Australians are currently paying $33 billion of credit card debt. If you default on your credit card or miss a payment of more than $150 for more than 60 days, it can stay on your credit report for up to five years. If you fall off the bandwagon, get up as soon as you can. If you skipped a few repayments, make sure that you pay them off as soon as possible.
Draw up a budget and stick to it
Oh budget, thou art surely neglected! You will be amazed to find out how much money you spend if you do not budget. Constantly check your bank statement to see where are the holes that are causing you to leak financially, and use realistic ways to repair them.
Avoid applying too often
Try not to apply for new credit or loans in a short space of time as this will raise red flags when you approach lenders. It will make you appear to be irresponsible with your finances and therefore a huge risk. Try to spread the applications over six months or on a one-year period basis. This will have less of an impact on your credit file.
Review your credit card
Another option could be reviewing the type of credit card that you have. Perhaps when you took it out it had a low interest rate with flexible repayment plans, but over the years it has increased to something that you can no longer afford.
It is vital that you compare a credit card and check its terms and hidden fees to ensure that you don’t have any shockers in a few months to come. Choose a card that will work with your financial situation. If you are unsure you can always speak to an accredited card provider who will guide you in your selection.
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