Your credit score and the part it plays in gaining better interest is critical for every Australian who is seeking to apply for a personal loan.
We all know life sometimes throws us a curveball which causes us to need a pay a large sum of money rather quickly. Giving us a lot of heartaches, financial strife and unnecessary setbacks.
From sudden medical expenses, runaway debt repayments or just needing a healthy cash injection, the need to get a quick and convenient personal loan very quickly becomes a priority task. One that relies on your healthy credit rating to ensure you get the best interest rate on your repayments.
For those who are yet to know what a credit report is, the difference between hard and soft enquiries and the advent of comprehensive credit reporting and what it means for consumers, head over to our blog on understanding your credit score.
Ensuring your credit rating remains healthy is the best way to get the lowest interest rate on your personal loan and is actually quite simple to maintain once you know-how.
In short, there are five simple things you can do to maintain your credit rating.
1. Check Your Credit Score Report.
First thing’s first, know where your credit rating currently stands. Using one of Australia’s credit reporting bureaus to send you a free report is not only simple and easy but is considered a ‘soft enquiry’ and won’t harm your score.
The Office of the Australian Information Commissioner is also a great way to ensure you’re getting the current and correct credit information.
Link through to these data bureaus to make your own soft inquiry on your credit score:
2. Set Up Automatic Bill Payment.
There’s no bigger shortfall to a declining credit rating than missing a repayment on a loan or not paying a utility bill on time. Life is busy and we forget to stay on top, so the simple solution is to set up automated transfers every pay/billing cycle. It’s a great way to automate your life and reduce your monthly errands.
Simply set and forget.
3. Reduce the Amount You Owe.
While it can be tempting to pay a minimum repayment and keep more money in your pocket in the short term, paying additional amounts to your repayment reduces not only the term of your loan but gets you debt-free a lot sooner. If you think holding onto that little bit extra every time is good, imaging no longer having to make any repayments.
Additionally, it’s also important to note that proving responsible repayments and money management will allow lenders to increase the amount that can lend to you in future.
4. Don't Rush to Close Old Accounts.
The lifespan of your accounts is a contributing factor to your overall credit rating. Someone who has maintained credit cards and other lines of credit for longer gives lenders a much clearer picture of who they are versus someone who is looking to borrow but only has a short-term record of account to prove they are indeed reliable.
The longer you’ve had credit, the better your score.
5. Don't Ask for Credit too Often.
While making basic enquiries into your credit report doesn’t affect your score, applying for credit, like a personal loan, reads as a hard inquiry, and will bring down your credit score. It only impacts your score for a relatively short time, but if you’re attempting to borrow more than your credit score advises the lender, you’re damaging your score for no gain.
A great way to avoid this is dealing with lenders who offer a pre-approval estimate on what you can borrow, so you can know just how much you can borrow without impact.
OMM Pre-Approval and How Soft Enquiries Do Not Impact Your Credit Score
With OMM, we provide you with an estimate on what you can borrow with your expected interest rate. Using this, we’re able to provide you with a form of pre-approval that doesn’t impact your credit score.
Previously, lenders would have to make a formal credit inquiry which would impact your score regardless if you wanted to progress with your application or not.
Using OMM pre-approval, we reduce the limitations on you, so you have the freedom and understanding to make an informed and secure decision.