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Welcome to Credit Connection’s guide on how to improve your credit score in 30 days!

Your credit score is a crucial component of your financial health and understanding how it works is essential for managing your credit effectively. In Australia, credit scores are used by lenders to assess your creditworthiness and determine your eligibility for loans, credit cards, and other forms of credit.

A good credit score can open doors to better loan terms, lower interest rates, and higher credit limits, while a poor credit score can limit your borrowing options and result in higher interest rates. Therefore, maintaining a good credit score is paramount for achieving your financial goals.

Understanding Your Credit Score

At Credit Connection, we believe that everyone has the power to take control of their credit score and improve it, even in a short timeframe.

In this article, we will provide you with practical tips and strategies to boost your credit score in just 30 days. So, let’s dive in and discover how you can elevate your credit score and enhance your financial well-being!

Understanding how your credit score is calculated is crucial to improving it.

The credit scoring system in Australia takes into account several key factors, including:

Payment History: Your payment history is one of the most significant factors that impact your credit score. It reflects whether you have paid your bills on time, including credit card payments, loan repayments, and utility bills. Late payments or defaults can negatively impact your credit score, so it’s essential to pay all your bills on time to maintain a positive payment history.

Credit Utilisation: Credit utilisation refers to the amount of credit you are using compared to your total available credit limit. High credit utilisation, where you are using a large portion of your credit limit, can negatively affect your credit score. Keeping your credit utilisation below 30% is generally recommended to maintain a healthy credit score.

Length of Credit History: The length of your credit history is another important factor that affects your credit score. Lenders prefer borrowers with a longer credit history, as it provides them with more data to assess creditworthiness. If you are new to credit, building a positive credit history over time can help improve your credit score.

Types of Credit: The types of credit you have, such as credit cards, loans, and mortgages, can also impact your credit score. A diverse credit mix, including both revolving credit (e.g., credit cards) and instalment credit (e.g., loans), can be seen as positive by lenders. However, it’s important to manage all types of credit responsibly to maintain a good credit score.

Recent Applications: Making multiple credit applications in a short period can negatively impact your credit score. When you apply for credit, it triggers a credit inquiry, which can lower your credit score. Therefore, it’s advisable to limit the number of credit applications you make, especially within a short timeframe, to protect your credit score.

By understanding these factors that affect your credit score, you can identify areas that need improvement and take proactive steps to boost your credit score.

Why Improve Your Credit Score?

Maintaining a good credit score is essential for your overall financial health. A higher credit score can bring numerous benefits, while a poor credit score can have significant consequences. Let’s explore why improving your credit score is crucial.

Benefits of a Good Credit Score: Having a good credit score opens doors to better financial opportunities. Lenders use credit scores to assess your creditworthiness, and a higher credit score can result in:

Better Loan Terms: With a good credit score, you may qualify for loans with favourable terms, such as lower interest rates, longer repayment periods, and higher loan amounts. This can save you money in interest payments and make borrowing more affordable.

Lower Interest Rates: A higher credit score can lead to lower interest rates on credit cards, loans, and mortgages. This means you’ll pay less in interest over time, which can save you thousands of dollars.

Higher Credit Limits: A good credit score may result in higher credit limits on credit cards and lines of credit. This can provide you with more flexibility in managing your finances and can be helpful in emergencies or for making large purchases.

Consequences of a Poor Credit Score: On the other hand, a poor credit score can have negative impacts on your financial situation, including:

Higher Interest Rates: With a poor credit score, lenders may consider you a higher risk, and as a result, you may be offered loans or credit with higher interest rates. This can increase your borrowing costs and make it more expensive to repay debt.

Limited Credit Options: A low credit score can limit your access to credit options, making it difficult to obtain loans, credit cards, or other credit products. This can restrict your financial flexibility and make it challenging to meet your financial goals.

Difficulty in Obtaining Loans or Credit: Lenders may be hesitant to approve your loan or credit application with a poor credit score, or they may require additional collateral or higher down payments. This can make it harder to obtain financing for important life milestones, such as buying a home or starting a business.

Improving your credit score can help you unlock better financial opportunities and avoid the negative consequences of a poor credit score. With a clear understanding of the benefits of a good credit score and the consequences of a poor credit score, let’s now move on to practical tips on how to improve your credit score in just 30 days!

Assessing Your Current Credit Situation

Before you start taking steps to improve your credit score, it’s crucial to assess your current credit situation. This involves checking your credit report and score, identifying negative factors affecting your credit score, and reviewing outstanding debts, late payments, and credit utilization.

Checking Your Credit Report and Score: Obtain a copy of your credit report from a credit reporting agency in Australia, such as Equifax, Experian, or Illion. Review your credit report carefully to ensure all the information is accurate and up-to-date. Check for any errors, such as incorrect personal information, accounts that don’t belong to you, or late payments that were reported incorrectly. Also, check your credit score, which is a numerical representation of your creditworthiness. Understanding your credit report and score is the first step in improving your credit situation.

Identifying Negative Factors Affecting Your Credit Score: Once you have your credit report and score, identify any negative factors that may be impacting your credit score. These can include late payments, defaults, high credit utilization, and other negative marks on your credit report. Understanding these negative factors will help you target specific areas that need improvement.

Reviewing Outstanding Debts, Late Payments, and Credit Utilisation: Take a close look at your outstanding debts, late payments, and credit utilization. Make a list of all your debts, including credit cards, loans, and other lines of credit. Note any late payments or defaults and assess your credit utilisation, which is the percentage of your available credit that you are currently using. High credit utilisation can negatively impact your credit score. Reviewing these details will help you identify areas where you can make improvements and develop a plan to address them.

By thoroughly assessing your current credit situation, you’ll have a clear understanding of the negative factors affecting your credit score and be better equipped to take targeted steps to improve your credit in the next 30 days.

Implementing Credit Repair Strategies

Once you have assessed your current credit situation and created a plan, it’s time to implement credit repair strategies that can help you improve your credit score. Here are some tips and strategies to consider:

Improving Payment History: Payment history is a crucial factor that affects your credit score. Make sure to pay all your bills on time, including credit card payments, loan payments, and utility bills. Late payments can have a significant negative impact on your credit score. Consider setting up automatic payments or reminders to ensure you never miss a payment.

Strategies for Reducing Credit Utilisation: Consider paying down balances on your credit cards and reducing your overall debt to lower your credit utilisation. You can also request a credit limit increase, which can help improve your credit utilisation ratio.

Lengthening Credit History: The length of your credit history also plays a role in determining your credit score. Keeping older credit accounts open can positively impact your credit score. Avoid closing old credit accounts, even if you are not using them actively. This shows a longer credit history, which can be beneficial for your credit score.

Diversifying Credit Types: Having a mix of credit types, such as credit cards, loans, and mortgages, can positively impact your credit score. It shows that you can manage different types of credit responsibly. If you only have one type of credit, consider diversifying your credit portfolio by adding another type of credit, if it makes sense for your financial situation.

Managing Recent Credit Applications: Avoid applying for multiple credit accounts within a short period of time, as it can negatively impact your credit score. Each time you apply for credit, it results in a hard inquiry on your credit report, which can lower your credit score. Be mindful of applying for new credit and only do so when necessary.

Remember, it’s important to be patient and consistent with these strategies, as credit score improvement is a gradual process.

Monitoring Your Progress

Once you have implemented your credit repair strategies, it’s important to monitor your progress regularly. Keep track of your credit score and credit report to ensure that the changes you’ve made are positively impacting your credit health. Review your credit report for any inaccuracies or errors and dispute them if necessary. Monitoring your progress can also help you identify any areas that may need further attention or adjustment in your plan.

Dealing with Negative Entries on Your Credit Report

Negative entries on your credit report, such as late payments, defaults, and collections, can have a significant impact on your credit score. Here are some strategies for addressing these negative entries:

Late Payments, Defaults, and Collections: If you have late payments, defaults, or collections on your credit report, it’s important to address them as soon as possible. Consider contacting the creditors or collections agencies to discuss payment arrangements or settlements. You may be able to negotiate a payment plan that fits within your budget or settle the debt for a lower amount. Be sure to get any agreements in writing and follow through with the agreed-upon payments.

Disputing Inaccuracies or Errors on Your Credit Report: It’s essential to review your credit report regularly for any inaccuracies or errors that may be negatively impacting your credit score. If you identify any discrepancies, such as accounts that don’t belong to you, incorrect payment statuses, or outdated information, you have the right to dispute them with the credit bureaus. Follow the dispute process provided by the credit bureaus and provide supporting documentation to substantiate your claim. The credit bureaus are required to investigate and correct any errors within a certain timeframe.

Negotiating with Creditors for Payment Arrangements or Settlements: If you are struggling to make payments on your debts, consider negotiating with your creditors directly. You may be able to work out a payment arrangement or settlement that is more manageable for your current financial situation. Be honest about your circumstances and provide evidence of your financial hardship. Creditors may be willing to work with you to find a solution that benefits both parties.

Additional Tips and Tricks

In addition to the strategies mentioned above, here are some additional tips and tricks to help you improve your credit score:

Leveraging Financial Tools and Ideas: Consider leveraging financial tools such as debt consolidation or balance transfers to help manage your debts more effectively. Debt consolidation involves combining multiple debts into one, usually with a lower interest rate, which can make it easier to pay off your debts. Balance transfers allow you to transfer high-interest credit card balances to a card with a lower interest rate, reducing the amount of interest you pay over time.

Building Healthy Credit Habits for the Long Term: Improving your credit score is not just about short-term fixes, but also building healthy credit habits for the long term. Practice responsible credit card use and minimise your use of Buy-Now-Pay-Later schemes.

Improving your credit score is a crucial step towards financial success. By following the key strategies outlined in this guide, such as checking your credit report and score, addressing negative entries, creating a plan, implementing credit repair strategies, monitoring your progress, and building healthy credit habits, you can make significant progress in improving your credit score in just 30 days.

So, don’t wait any longer. Take action today and start improving your credit score.

With determination, discipline, and consistent effort, you can achieve a better credit score, which can open doors to better financial opportunities and provide you with the financial freedom you deserve. You have the power to take control of your credit and create a brighter financial future for yourself. Get started now and watch your credit score soar!

Tighter new credit card rules mean that providers must strictly assess card applications… which could come to impact mortgages down the track.

Credit Card Rules: What’s Changed?

In the past, credit card contracts were assessed as unsuitable if the applicant couldn’t repay the minimum monthly repayment for that limit. Under the new rules, credit card providers must assess whether the applicant can repay the entire credit card limit within three years.

If a credit card applicant cannot repay the full credit limit in three years, it’s assumed that they will be in substantial hardship. This is because a consumer who cannot afford to repay the limit within three years will probably pay a staggering amount of interest that will take an extraordinarily long time to repay. If the applicant is in substantial hardship, the credit card provider must decline the application as being unsuitable.

Other Lenders and Brokers May Be Affected

Technically, this new rule doesn’t apply to other lenders or brokers; even when they’re assessing an application from a borrower who holds a credit card. This means that when assessing the suitability of a mortgage or a car loan, the credit licensee can assume that only the minimum monthly repayment will be made on the credit card.

But all lenders and brokers have an obligation to reject a credit contract if it would place the consumer into substantial hardship.

If the inability to repay a credit card within three years is considered to be a substantial hardship when assessing a credit card application… how can it also not be substantial hardship when a consumer is no longer able to repay their credit card within three years, because they’re meeting new repayment obligations on a car or home loan?

These Two Scenarios Highlight the Common Problem…

In scenario 1, an applicant with a $500,000 mortgage applies for a $15,000 credit card. When assessing the credit card, the provider determines that the applicant is unsuitable because they won’t have enough income to repay their credit card limit in full within three years. So, the credit card provider declines the application.

In scenario 2, the same applicant already has a $15,000 credit card and then applies for a $500,000 mortgage (on identical terms as in the first scenario). The licensee is only required to consider whether the applicant can make the minimum monthly repayment on their credit card when determining if they will suffer substantial hardship. On this basis, the licensee approves the mortgage.

The end result for the applicant is the same in both scenarios. They have a $500,000 mortgage and a $15,000 credit card limit. So, how can we say that they are in substantial hardship in one scenario, but not in the other? It’s an absurd outcome that the same person could be approved or declined for a credit product… just because they applied for them in a particular order.

Regulation Shifting the Credit Landscape

Over time, the courts and AFCA may seek to align the obligations of all credit providers and brokers. In the meantime, ASIC has said it expects all credit licensees to apply the rule to existing credit cards by 1 July 2019.

This means that credit providers and brokers should consider the implications of this situation when determining how they will assess a credit card holder’s capacity to pay, and whether they are in substantial hardship, for other loan applications.

There are few careers and lifestyles out there that are without their stressful phases… therefore, it’s vital to understand the importance of time management. Having a managed, stress-free schedule can make a huge difference for your personal finances. A lot of similarities can be drawn between managing money and time. For example – always wondering where it went!

Improving Time Management Benefits Your Finances!

Effective time management is an essential skill for any successful human being. Successfully managing one of these aspects gives us the ability to transfer our resources into the other. On a daily basis, we face a multitude of time pressures. Time management is about taking control of your available time – before it takes control of you!

Streamline Your Priorities!

Many people fall into the trap of completing tasks as they pop up… or focusing on doing the simple tasks first because they’re easier. Unfortunately, this can lead to time-sensitive or urgent tasks being overlooked; creating far more work pressure than required. The most effective method for overcoming this? Determine your priorities. It’s simpler than you think; especially if you follow our advice and create a daily to-do list.

Being able to prioritise stretches everything further. By prioritising tasks, you intend to accomplish your tasks in order of their hierarchical importance. Prioritising and completing tasks that matter more also creates a better sense of personal success. Having a clear focus on your time and money goals will make it easier to stay on track. A focus on goals will also help you with the prioritisation of what matters most.

Time Management is as Easy as A, B, C!

For a very simple way to prioritise your tasks, try thinking about each of them on 3 levels of priority: A being the most urgent, B being relatively time-bound and C as being something you can postpone tomorrow without any negative effect.

The Difference Between Priorities and Goals

Think of goals as being part of the ‘bigger picture’; tangible milestones that you’re trying to achieve (e.g. saving for a house deposit). Priorities are the things that you’ll need to say yes or no to in order to reach that goal.

For example, in order to pay off your mortgage faster, your priorities need to be making your money work harder for you.

Develop a Routine

Having a routine will cut down the amount of time spent on decision making each day. Albert Einstein owned several variations of the same grey suit, which he wore every day. He reasoned he could use the extra brainpower and time for more beneficial purposes, instead of deciding what to wear.

We recommend creating a simple to-do list that you can follow each morning and afternoon.

Example Routine/To-Do List

Morning

Turn on the computer and make a coffee
Check email and respond to urgent ones
Review to-do list – adding non-urgent emails
Review lesson plans for the day

Afternoon

Send emails as needed
Tidy any mess from the day
Write a to-do list for tomorrow
Prepare materials for the next day’s work

Don’t Freak Out!

If you don’t meet all your time management goals straight away, don’t expend energy on stress. Building resilience is all about making ongoing progress in time management. As long as you’ve done your best, there is simply no point in adding stress to your to-do list for tomorrow.

No matter how hard you work to manage your time, there are still only 24 hours in a day to get it all done. Spend a while observing your day to day work as objectively possible to identify areas where improvements can be made if you feel you need to.

As more Australians fall behind the rapid pace of the property market, the question on the lips of many Australians is whether they will ever pay off their debts. The number of mature age Australians who still have mortgage debt in retirement is consistently increasing – and on average, each older Australian with a mortgage debt owes much more relative to their income than 25 years ago.

How many Australians will soon be unable to retire comfortably amidst an international retirement savings crisis, compounded by COVID-19 and further economic uncertainty?

A study by the leading professor of economics at Curtin University found that “more Australians are finding it difficult to pay off their mortgage before retirement.”

Nearly 50% of Australian homeowners aged between 55 & 64 are still paying off their home loans.

People now have to work into their late 70’s, just so they can pay their debts off. In addition to this, there is an increasing number of older Australians who facing the reality that they will not pay off their mortgages before retirement. More than half of the Australian retirees are finding it increasingly harder to pay off their mortgages, and are being forced to rely on the senior’s pension.

The average mortgage debt among older Australians has risen by 600% since the late 1980’s.

With more retirees being unable to service monthly mortgage repayments, a larger number of them are forced to rent; getting stuck in poverty, with no way out. A shocking study by the AHURI found that the surge in mortgage debt among older Australians has outstripped growth in asset prices and incomes… meaning that it is becoming more and more difficult to pay off mortgages among all types of incomes.

Debt-free home ownership used to be a pillar of the Australian retirement strategy. It still can be, with the right support and planning.

I always love to save money—don’t we all? Especially in such economic uncertainty, nearly everyone is looking for a way to save money long-term and retire well. Let’s review four basic ways to save money over the long run!

1. Don’t Waste Your Money!

Every dollar that you waste on something you don’t need (like cable, or new clothes, or a bigger TV) is a dollar that you cannot save for your future. Cancel your extra monthly subscriptions and anything else that you really no longer need. Run outside, instead of paying for a gym membership!

2. Plan Ahead – Have a Savings Goal for the Future!

Make a plan to save money for your retirement. Having a written plan is the first and most important step to long-term financial success.

3. Become Debt-Free ASAP!

Paying off your debt as soon as you can is essential to being able to start saving money long-term. How can you save money if you’re constantly paying for credit card bills, a new car, a bigger house, or old student loan debt?

4. Eat Your Meals At Home.

Instead of eating breakfast, lunch, and dinner out at restaurants, commit to eating all of your meals at home, every day. This will likely save you around $500 per month if you are currently eating out daily. Look at your current bank statements and calculate how much you spend on eating out at restaurants each month… you might be surprised at how much you are really spending!

All of these tips are pretty straightforward and are powerful strategies to help you reach your goals. Hope you enjoyed these, and that you find a way to use them for your benefit! If you have had success using any of these methods… let us know!