5 habits of people with good credit scores
Does anyone actually have a good credit score? More importantly, who cares about credit scores in 2022?
Let’s tackle that first question, many Australians DO have a good credit score! It can take time to build a good credit score so get started now. Take a look at the 5 key habits for building a healthy credit score.
Did you know you can compare your credit score to other Aussies for free? Join Credit Savvy for free and check out how your score stacks up.
1. Check your credit score regularly
Knowledge is power! It sounds simple but simply knowing your score is a good first step. Take stock of where you are now, to know what steps you might need to take to improve your credit score. Regularly checking your score will help you track progress in improving your credit score. It can also help you spot any errors or fraudulent activity on your credit file so you can protect your credit reputation.
2. Paying on time
In order to achieve and maintain a good credit score, you need to repay what you borrow within the terms agreed. This has never been more important since the introduction of Comprehensive Credit Reporting (CCR), which means that credit providers can provide information on your open accounts and repayment history to the Credit Reporting Bodies (CRBs).
An important point to note, not all credit providers report to CRBs. If you are hoping that on time payments will help build your credit score, it’s worth checking with your provider that they adhere to the Comprehensive Credit Reporting rules. Many people are shocked to learn that the majority of Buy Now, Pay Later providers do not report to CRBs.
3. Doing research and only applying when you need it
Too many applications for credit can drag your score down. Investing some time in researching your credit options before you make any applications is a good idea.
Firstly, research the market, compare products and read all that fine print to make sure you meet the eligibility criteria. This can help you avoid the dreaded credit rejection and ensure you get something that is right for you and your needs.
Secondly, only apply for credit when you are serious about taking out new credit. Simply applying for credit to see what happens can adversely impact your credit score.
4. Applying for different types of credit
Enquiries for different types of credit and with different types of lenders can impact your score in varying ways. Home loans, personal loans and credit cards all influence a CRB’s scoring algorithm in different ways
Additionally, an enquiry with (for example) a payday lender may be viewed less favourably than one with a bank.
What is a credit enquiry? When you apply for a credit product, such as a credit card or personal loan, a ‘credit enquiry’ is recorded on your credit file. This ‘credit enquiry’ will appear on your file regardless of the application outcome. More here.
5. Get a free annual copy of your credit report
Everyone is entitled to obtain a free copy of their credit report from each of the CRBs in Australia, every 3 months. The process can be manual and take a week or more with most of the CRBs providing a PDF copy of your report. It can be worthwhile to review your full credit file periodically to check for any errors or inconsistencies on each of these reports. Errors can impact your score and potentially an application for credit.
It’s 2024 – are credit scores still relevant
Credit providers such as banks, utilities and other lenders use credit scores, and your credit file, in the decision making process about your borrowing power. So whilst a ‘number’ isn’t the be all and end all, it’s worth keeping an eye on your credit score to make sure your credit file is in good shape when you are ready to make those big life purchases.
With Credit Savvy you can access your credit file summary, track your credit score and gain insights on improving your credit score. Join for free today.
