It’s such a shame when we get asked how to get a home loan with bad credit, or how to get a personal loan without credit. Often, loan applicants haven’t realised just how much their credit score can come back to haunt them until it’s too late.
However, your credit score isn’t set in stone, and while it’s something we can improve over time, it’s also good to know how to keep it healthy from the get-go, so we can avoid disappointment in the long run.
Here’s how to boost your credit score in five easy steps.
Keep an eye on your credit score
You shouldn’t fear applying for a home loan, personal loan or credit card – with the right information, you can apply with confidence. It’s free to access online through sites like Finder.com.au, and checking in with your score now and then is a great idea. If you see any changes in your score, for better or worse, make sure you can account for them!
Always pay your bills on time
In 2017, it’s getting harder and harder to avoid paying our bills on time, thanks to banking automation through online banking and mobile apps. With this in mind, we definitely recommend taking the human element out of bill paying and giving yourself one less thing to worry about. This is because late payments or defaults leave their mark on your credit report. For example, a small overdue payment of $150 can appear on your credit report after 60 days, and stick around for five years!
Have an active credit account
It may seem counter-intuitive at first, but lenders don’t tend to look favourably on an applicant with absolutely zero credit history. This is because there is no track record for the applicant to use to show they can use credit responsibly. Don’t worry, though – you can start small. Getting a mobile phone plan or internet account will do the trick, as will utility accounts like electricity and gas. Just make sure to always use your correct address and contact details when setting these accounts up, and do the right thing by avoiding any late payments or defaults, and you’ll be fine.
Avoid too many hard credit enquiries
This one isn’t common knowledge, but every time you apply for a form of credit, the prospective provider will usually request access to your credit report – this is called a ‘hard enquiry’. Racking up too many of these may cause you to be viewed as a credit risk by potential creditors and lenders, because it shows a tendency towards desperation, suggesting you’re not effectively managing your relationship with credit. Our tip? You should avoid applying for credit cards or home or personal loans unless you’re reasonably confident you’ll be approved, and if you are declined, wait a while before applying again.
Job stability and fixed address matter
One thing that is looked upon favourably by potential creditors is if you’ve been able to stay in both your job and home address for a period longer than 18-24 months. This demonstrates not only that you’ve likely passed your employment probation period at work, and have staying power, but that you’re in a stable living situation, and pose little threat of becoming a flight risk.