Many Australians are not aware of the fact that they need a good credit score if they want to qualify for a loan in the future.
This is worrisome, especially if one’s goal is to borrow money to purchase a home or vehicle. In case you didn’t know, your credit score proves your reliability when you apply for loans. Banks typically have strict criteria when it comes to granting loans, so having a good credit score is crucial.
The good news is there are ways on how to increase your creditworthiness.
Make the most of your borrowing capacity: take out a personal loan!
- A clear record of payments made in a timely fashion means that you have good debt management skills. If you can pay earlier than the due date, then it’s all the better! Be cautious about late payments, though—even a single instance can have a major impact. Get in touch with a finance broker that can assist you in mapping out a plan of action.
- Being granted a large borrowing amount doesn’t necessarily mean you have to take it all. Break down what the essential necessity is. Approved for a $10,000 loan but only need $2,000? Opt for the latter amount. There’s no need to take on an extra $8,000 loan that may end up taking a hit on your score and cost you interest. It’s not the amount of the loan that will help things along—it’s the repayment.
- Credit consolidation is key. Reduce the debt on your credit card with a personal loan and your credit utilization ratio instantly improves alongside! If you merge that with automatic payments in order to ensure you always pay on time, it’s a winning combination. Say you take on a personal loan of $5,000 with a two-year repayment term with an interest rate of 12.9 per cent. That means that over the loan’s lifespan, you would be paying roughly $237.50 per month and roughly $700 in interest. Compared to making minimum payments on a credit card balance at 19.99%, it’s clear that this is a much faster timeline that will enable you to pay off outstanding balances.
- Do your due diligence and research everything. Don’t dive into an offer right away no matter how lucrative it seems. Go into the details like associated fees and interest rates, and look into the company itself as well. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. This is about long-term solutions, and getting into something that will add up later could undo everything.
- Exercise caution by narrowing down lenders to just one. Multiple loan applications will appear on your credit report as a hard inquiry. This can actually pull your credit score down. When you inquire, do so with a lender where your application will most likely be approved. That way, score impact is lowered greatly.
- Focus! The more on-time payments you make, the more your credit score improves. Great, right? Other types of loans will likely be made available to you when this happens. Don’t take on more than you can chew just because you can.
- Go over every single thing in the agreement. Your loan has been approved and now all you need to do is sign the dotted line. Take your time. Read everything, paying specific attention to clauses about fees and any possible penalties.
- Remember that help is available. If there are things you don’t understand, just reach out to professionals with a proven track record in assisting others. You don’t have to go through complicated financial jargon alone.
It’s never too late to take action and get your credit score on track! There’s always room to bounce back. Going about it smartly, taking out a personal loan is easily your best option.
FinanceCorp is a business finance brokerage firm in Australia. We will go the extra mile from financial calculators to paperwork and more in order to match your needs not just now, but also in the future! Reach out today so we can work together in making your credit score the best it’s ever been.