Top 5 Tips For Keeping Your Credit File Clean
If you’re looking to buy a property a clean credit file is paramount. But how do you make sure your credit history is in a good place? These tips from Mortgage Choice will help you maintain good credit.
1. Understand where your money is going and pay on time. Know your cashflow back to front and ensure responsible payment of your credit cards, bills and personal loans by contributing the funds required before the due date. Make time to monitor your accounts closely and look for any discrepancies. Once familiar, you will understand your spending habits better. Do you know the exact balance of your credit card and other loans, their interest rates and fees? Do you keep utility bills on the top of your ‘to do’ pile and file them after paying?
2. Make it automatic. Missed and late payments are one of the most common defaults on a credit file. Paying bills and minimum repayments before or on time will help prevent unwanted fees. A good way to ensure you don’t miss one is to set up auto transfers from your savings account.
3. Don’t go overboard. It is easy to go over your credit limit, miss paying bills or fall into the habit of thinking “another debt won’t hurt”. You can quickly lose track of spending and fall behind, which is when defaults appear on your credit file. Have a budget and stick to it. Lost motivation? Consider what life will be like if you can’t apply for a home loan or other credit in years to come.
4. Just say no. Credit providers may tempt you to increase your limit. Resist unless absolutely necessary; don’t increase spending simply because you can. If you are only just getting by you should think about reducing your limit until in the clear and perhaps cut up your credit card/s.
5. Pay more than the minimum. By repaying only the minimum required amount on your credit card or personal loan you end up paying a great deal in interest and may never pay it off. Paying debts off in full or making repayments above the minimum amount and restricting your spending will help ensure you pay your balance off and do not tarnish your credit file.