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3 tips on how to increase your credit score

Updated: Jan 23, 2023

There are many variables that affect your credit score, and as such, affect your ability to apply for a home loan.



1. Hard Inquiries


One of the lesser known culprits is ‘Hard Inquiries’. Essentially, the more you inquire about getting more credit the higher the negative impact on your credit score.


When you apply for a loan, a lender may request to review your credit history. This inquiry is listed on your credit report as a ‘hard inquiry’. Hard inquiries are kept for up to two years on your credit report, and tell a lender how often you have applied for credit.


Too many inquiries in a short period of time can negatively impact your credit score.


Even just inquiring about a new:

  • Credit card

  • Home loan

  • Buy now pay later account

  • Personal loan

  • Car loan

  • Line of credit etc etc


So plan your finances - talk to a broker about the effects of any credit inquiry, including those listed above. Let them help you navigate your application, without making too many inquiries.

2. Late repayments


Late repayments can be reported regardless of the amount owing. So a seemingly innocuous missed repayment can have a serious affect on your credit score, regardless of how big or small.


Some key pointers:

  • If you do miss a repayment, most credit providers give a 14 day grace period. Catch up quick!

  • Set alerts for all repayments, including utility bills

  • 2 missed repayments are far worse than one, 3 missed repayments can throw a massive spanner in your home loan application process

  • If it is the first time you have missed a repayment, ask your provider to waive the fee referencing your spotless record. Keep it spotless.

Details of any missed payments can stay on your report for 2 years.


3. Defaults and court judgements


A default can stay on your credit report for 5 years, a more serious infringement can stay on for 7. Always try to come to an agreement with your creditor without defaulting or going to court.


Furthermore, it is important to get professional help if you feel one of your accounts is heading in this direction.


Some professionals that can help include:

  • National Debt Helpline

  • Debt consolidation professionals

  • Mortgage Brokers

  • Debt negotiators

  • Credit repair professionals


A final tip would be to take advantage of the availability of your credit report, which you are entitled to.


If you are thinking of taking out a home loan, after your first step of contacting a mortgage broker of course, the next step is to get a copy of your report.


We’d recommend signing up to one of the three major credit report providers; Equifax, Illion, or Experian.

  1. My Credit Report (Equifax) – They have a free version but the paid $9.95 pm version gives you

    1. A report every month

    2. Credit alerts to changes on your report

    3. A monthly Equifax score update

    4. Summary of main contributing factors to your score

  2. Credit Savvy – Experian's free report tracker

  3. Credit Simple – Illion’s free report tracker


Above all - Talk to your mortgage broker! They can help you navigate this.

Check out my related blog on improving your chances of getting a home loan

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