How to improve your credit score

Improving your credit rating can be a vital aspect to gaining approval for loan applications. If you’re finding that past defaults are affecting your financial future, with a bit of discipline and the following tips, you can improve your credit score.


Keep your debt to credit ratio low

While not having a credit card in the first place would be advisable, we understand that life isn’t always that simple. If you have a credit card, a consistently low balance on the card is much better for your credit score than a higher one. 


This will lower your debt-to-credit ratio, as having a negative $300 balance on a $500 card is worse than a negative $700 balance on a $2000 card. If you’re finding that you often reach the limit of your credit card, it could be worthwhile increasing the limit; as long as you’re confident you won’t then be tempted to spend more. Along with this, we recommend developing a direct debit plan, transferring your available budget for dept payments towards your credit cards with the highest interest rates.



Pay your bills on time 

Paying your bills on time is basic financial literacy, but it’s incredibly important and not as common as you’d think. Defaults are best avoided where possible, as they can be some of the most significant black marks on your credit report.


This is particularly important if the bill is over $150, as a missed payment of that size or more can be recorded as a default on your credit report if it remains unpaid after 60 days. A record of consistent, punctual payments will do wonders for your credit rating.



Re-evaluate your credit needs 

Avoid applying for new credit where possible, as every credit application you submit can shave down your credit score, whether approved or not. On the other hand, applying for a credit product to replace your current situation, such as consolidation, can positively impact your score. If you have multiple personal loans or credit card debt, it may be worthwhile consolidating them under one product. This is not a recommendation to take out additional credit, or more credit than you need. Instead, re-evaluate how you can best manage your current credit situation.

Reduce the amount of debt you owe

Paying off any outstanding debts is the easiest solution to your credit score dilemmas, but it will require determination and considerable discipline. There are debt negotiation and mediation services available for people who are in financial difficulty. While not everyone will qualify for this service, it’s worthwhile looking into if you’ve had a significant unfortunate life event that has affected your finances. If this is an option for you, we recommend contacting United Debt Assist.


Beware of any financial products and services that promise to repair your credit score. Some lenders give you fast, easy money; but lock you into high interest rates, short loan terms and high repayments.


This can often lead you to default on payments, negatively impacting your credit score. LoanU is different. Our loans are designed to help you recover your credit rating, with your interest rate decreasing considerably with your repayments.


Check if you qualify for a loan with LoanU – without damaging your credit score by entering your details into our qualification calculator.


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Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or requirements. Therefore, please consider whether the information is appropriate to your circumstance before acting on it and seek independent advice from a finance or legal professional if necessary. All loans are subject to a full application and assessment by United Loan Solutions Pty Ltd trading as LoanU (Australian Credit Licence number 486303). LoanU is part of the PF Group Holdings Pty Ltd group of companies.



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