More and more these days, a good credit rating is worth its weight in gold. You can’t purchase your dream home on the Gold Coast, the car of your dreams or any other large ticket item without a good credit rating, unless you’re a millionaire. However, for most of us, we are going to need the help of a lender at some point, and this means lenders will check your credit rating.
Increased interest rates can have a significant impact on your credit rating. From credit cards to existing mortgages and loans, high interest rates means the more expensive it will become to do business with credit. If you are not able to make timely and at least minimum payments on your credit card, your credit rating is going to be impacted. This will cost you a lot of money in the long run, since a lower credit rating means any loan or credit card is going to have a higher interest rate.
It may seem like a vicious cycle, and it is. The best thing to do is to start out with a good credit rating from the beginning. However, for some of us, it is too late for that. Don’t panic – there are many ways you can fix your credit, and while it may take a little bit of time, it’s worth it.
- Limit credit card applications. Too many inquiries make it look like you’re desperate for credit and will lower your credit rating, even if you never open the account.
- Make existing payments on time. This goes for rent, utilities, current loans – they all show up on your credit report.
- Don’t max out existing credit cards. Lenders will look at how much of a “debt load” you are carrying, and the closer to the maximum on your credit cards, the more debt. Lenders don’t like this.
- Don’t close out old accounts. Even if you rarely use it, an old credit card account testifies to the fact you are consistent and establishes a long credit history. Your potential lenders count this as a positive sign.
- Dispute the errors. Nothing is perfect, not even credit reports. You are entitled to one free report every year, so request and review it. There’s likely to be some kind of mistake there, and you are absolutely able to dispute it and have it removed from your report.
Keep your eye on the interest rates, do what you can with your credit rating, find the best credit card deals and you could be living on the coast in no time at all.