Struggling to get finance because of a bad credit score? Start improving it from today with these 4 helpful tips.
Your credit score may be with you for life, but a bad one doesn’t have to be!
Posted August 2022
First things first: what is a credit score? A credit score is a number between 0 and 1,000 that indicates how credit-worthy you are, and how likely you are to pay your bills on time. Your score is created by the way you pay your bills. In really simple terms; people who pay their bills on time will have higher credit scores than people who pay their bills late or not at all.
Among other things, a credit score weighs your positive credit history against the negative. If a lender finds that you’re financially irresponsible, have large amounts of debt, have missed Buy Now Pay Later payments, or carry maxed-out credit cards, you’ll have a tough time obtaining finance. And, if you’re even approved for personal finance, it’s likely you’ll have to pay higher interest than you might have otherwise.
However, there’s no need to throw in the towel just yet.
There is a silver lining.
With the right techniques and strategies, there are many ways to boost your credit score; helping to improve your chances of being approved for your next loan and often saving you money on interest.
Today we’re helping you to live your best financial life by sharing 4 of the easiest ways to improve your credit score, which will help you to:
- Improve your chances of getting a loan
- Save $$$ by gaining access to lower interest rates
First, let’s take a look at why now is the time to give your credit score some much-needed CPR:
Do you have a bad credit score? Here are 4 reasons you should improve it.
The rewards for having a good credit score are more than just a feeling of accomplishment. Credit scores are far more tangible than that. Having a good credit score can prove to be invaluable the next time you apply for a loan, hire purchase or credit.
The benefits of a good credit score can include:
Qualifying for lower personal loan or credit card interest
Getting approved for a higher loan amount
Improving your chances of getting a rental property
Helping to get utility services like power and internet more easily
Sounds pretty good, right?
How do I know what my credit score is?
It’s easy to access your credit score. For a free, immediate and easy assessment visit Credit Simple and follow the instructions.
You can also request your credit report from any of the following Kiwi credit agencies:
You won’t have to pay, but the report may take a couple of days to show up in your inbox.
Most Kiwis’ score between 300 and 850. If your score is under 650, you might be considered for credit but there could be some additional conditions attached. Anything under 500 and you should definitely consider some actions to help improve it.
The good news is, it isn’t all that difficult to do!
If your score is a bit…um…sad face emoji…use the following 4 techniques to help improve your credit score:
1. Pay your bills on time
Ok, so this one seems pretty obvious.
It’s also absolutely crucial.
Bank loans and credit cards aren’t the only thing that affect your credit score. Your electricity, internet and phone service providers (among others) are also credit providers. And, they’ll report delinquent accounts to credit bureaus.
Missing your payment deadlines on a few bills is a quick way to put a dent in your credit score. It will indicate that you are not reliable when it comes to on-time payments, so you do need to pay them on time.
2. Dispute errors
Things can - and often do - go wrong, and people make mistakes.
After all, we are only human.
Unfortunately, if these mistakes involve your credit history, they’ll negatively affect your credit score and your ability to get a loan.
Thankfully, addressing these errors isn't difficult. You can quickly and easily access your credit report without affecting your credit score using a service like Credit Simple. Just log in and check your credit score online, right now, completely free of charge.
If you uncover and report an error, the company who filed the issue is obligated to investigate it, and it can be removed if you are correct. So, make sure you report any errors you find, and follow up on the investigation process.
The major lesson here?
Don’t let issues that you didn’t cause hold back your creditworthiness.
3. Limit Buy Now Pay Later
BNPL platforms provide shoppers with a purchase limit, ranging from $1,000 to $10,000 - which can sometimes go beyond your means.
And with multiple BNPL providers available in New Zealand, it can be easy to find yourself locked into more than just one – making it difficult to keep track of repayments.
BNPL can be a useful payment tool when used responsibly. Unfortunately, the people who get into trouble with BNPL are often already highly indebted.
Lenders will look at your credit rating when you apply for any type of loan, be it a personal loan, home loan, car loan or credit card. If you use BNPL, it will be included as part of your credit assessment.
Find out more about BNPL here (insert blog link when live) and think about whether, for a big-ticket item, you might be better off with a secured personal loan instead.
4. Get some more time on your side
As a rule of thumb, young people generally have a lower credit score than older people. And that’s simply because they haven’t had time to build a higher credit score through their history with credit facilities and service providers.
This is great news for all our younger readers, as hopefully you now have the tools you need to start building a good score. So, start making those positive life choices today!
You have a plan, now it’s time to take action
All you need is one word to sum up the process of improving your credit score: Disipline.
If you find yourself with a low credit score, this could be the result of poor discipline, little-to-no credit history, or a combination of the two. The only exception being unfortunate circumstances where something outside of your control - like the loss of your job - has damaged your credit score.
In any case, it will take diligence in knowing your credit score and development of financial discipline that will bring it back, improving your attractiveness as a borrower and lowering the interest you’ll be asked to pay.
By using the 4 steps we’ve explored above? You'll be well on your way to doing just that.
WHAT'S NEXT? Use your new & improved credit score to land a low-interest loan