Your credit score plays an important role in your overall financial well-being and success as it helps lenders to decide if they should lend money to you. Before we go any further, let’s take a quick look at what a credit score is and how it gets factored into your finances.
A credit score is a number unique to you. It is calculated based on an analysis of your credit file including your credit history, enquiries, payments and other related information. It gives lenders a snapshot of how responsible you are with your money and your credit. For example, if you are thinking about taking out a personal loan or purchasing a home, lenders will evaluate your credit score to see if you’ve been responsible paying your other debts over time. If there are late payments, or other negative items on your file, 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 you may have.
Now that you know what a credit score is and how it can affect your finances, let’s look at 4 ways you can start improving your credit score:
Why it's important to check your credit score
Checking your credit score is important for several different reasons:
Remember, the best way to maintain a good credit score is to pay your bills on time and avoid borrowing more money than you have to. Each time you miss a payment on a bill your credit score could go down. Pay it on time and your score will improve. To find out more about your credit report and the potential finance options available to you, visit mycreditoptions.com.au - they offer a free credit rating service!
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs.