step 1

Stay vigilant

Maybe you’ve never even considered it, but your credit score is always there in the background. As soon as you start applying for credit, big or small, you start accruing a credit history, which affects your credit score.

Maybe you ended up having more fun than you anticipated on holiday, and put the extra week on your Credit Card. You’ll pay it off eventually, right? Well – if you’ve been a little careless with your relationship with credit, you might be in for a little shock.

So that you can reach some of life’s big financial milestones, such as buying a home or a new car (and getting the loan that will help make it happen), it pays to stay on top of your credit score. Familiarise yourself with your score, and stay on top of it as you take steps to improve it.

step 2

Pay your bills on time

It might seem simple, but little things like paying your bills on time will go a long way towards improving your credit score. It shows any potential creditors that you are comfortable with credit in any form, small or large, and can be trusted to meet your commitments.

And let’s face it – we live in a technologically advanced world, where it’s becoming harder and harder to avoid paying your bills on time. Thanks to banking automation and mobile banking apps, you can take the human element and temptation out of the process, so why not do it? Give yourself one less thing to worry about.

Remember – late payments or defaults can leave their mark on your credit report. A small overdue payment of $150 can appear on your credit report after 60 days, and stick around for years.

step 3

Stay credit-active

It may seem a little counter-intuitive at first, but potential creditors don’t look favourably on an applicant with zero credit history. This is mainly because there is no track-record to show you can responsibly use credit, and a distinct lack of credit-use may seem suspicious.

Don’t sweat it though – there’s no need to panic just because you may have preferred to save for what you want in the past. You can start small when it comes to credit – get yourself a mobile phone or internet data plan, or get yourself on the grid and start paying utility bills. Showing that you can manage these accounts is enough to demonstrate your healthy relationship with credit.

step 4

Avoid too many hard credit enquiries

It’s a little known fact that every time you apply for a form of credit, the prospective provider will usually request access to your credit report. This is what’s known as a ‘hard-enquiry’.

Racking up too many of these may result in potential lenders viewing your application unfavourably, as it can indicate desperation, or that you’re not effectively maintaining a healthy relationship with credit.

Our tip? When it comes to applying for credit, speak to your lender and find out what their lending criteria are. That way, you can wait until you’re relatively confident that your application will be successful, and avoid too many hard enquiries.

step 5

Little details matter

Again, it might seem like something you’d never think of, but if your credit score isn’t as healthy as it once was and you still need to apply for credit, potential creditors will definitely look more favourably on your application if you can demonstrate stability in relation to your job history and home address.

It demonstrates that you have staying power (and have passed your probation period) at work, and that you’re in a secure living situation, and are less chance of becoming a flight risk, resulting in a bad debt.