Tips for a good credit score

14 August, 2019
Credit score, credit history, credit rating - they’re known by many names, but we all know what they are - an assessment of your finances and an overview of your history with money.

A credit score is used as a way for lenders to get an understanding of how responsible you are and whether you can be relied upon to pay them back. 

But are you across the factors that could potentially affect it?

Sometimes small decisions, made on an impulse can have a long lasting effect - and follow you forever. 

Here are some things you can do to ensure you have a healthy credit score.
 

Pay bills and repayments on time

Payment history determines a huge percentage of your credit score. 

Credit cards and loan repayments should always be paid on time or before the due date. Missing repayments is a big red flag for lenders. 

Serious payment issues, like collections, bankruptcy, repossession or foreclosure can have a huge impact on your credit score.

If you are managing several repayments, planning a schedule to make sure you stay on track is a good way to ensure this never happens. 

Setting up direct debit is a great idea, but be careful - make sure there is always sufficient funds in the account for these to be made. 

The same principle applies for your rent - landlords/agencies will often be contacted to see if there have ever been any issues here. 
 

Solvency

Your assets are taken into account when applying for a loan - not just the cash in your account. 

Solvency means your assets are worth more than the debt you have. Lenders will balance the value of each to assess your liability factor. 
 

Keep to your credit limit

Maxing out the limit on your credit card is another worrying sign for lenders. 

And credit companies like Cash Train or Nimble are not the solution to paying off credit card debt - they are an even worse indicator for some..

Another credit card related tip - it’s handy to keep cards that have a good repayment history open, if you’re planning to apply for a loan. It can be used as evidence of reliability. 
 

Limit Number of Credit Inquiries

Every time you submit an application that requires a credit history check, an inquiry is recorded. This will happen even if one financial institution does multiple credit checks for the one application.

Several inquiries, especially within a short period of time can cost you points off of your score. 
 

Other factors

There are some other important things that don’t directly affect your credit score, but are still taken into account in your application for a loan.

Your income, bank balances, afterpay, employment status, age and number of dependents can still influence the decision to approve your loan, but they don't actually factor into the algorithm that calculates your credit score.
 

Tony’s Tip!

Our Mobile Relationship Officer Tony has worked with many borrowers over the years. 

One of the concerns he’s heard from young borrowers is that they haven’t had time to build up a credit score.

His advice is - only borrow money when you need to. Try sticking to just one credit card - and maybe have a back up debit card for travelling overseas or other occasions.

He also advises young borrowers to get their most important purchase done first, such as their first home. Worry about cars or other recreational things (like boats, bikes etc) afterward.

It’s much easier to get into a home with no other commitments than trying when you have several other loans or five credit cards.

In saying that - if an applicant is earning a large salary and can easily afford numerous loans, then go for it. He takes all of this into consideration. 
 

The CWCU difference

At CWCU, we are focused on our communities, and helping them succeed.

The difference between us and the big banks is - we take a holistic look at your finances, not just your credit score.

We are open to working with you to find a solution, where possible. So stop into a branch and chat to our loan team - or call Tony, he can come to you!