We all know the importance of maintaining a good credit score, but sticking to it can be a different story. Sometimes you need some help with credit repair, which can seem daunting, but don’t forget- you’re NOT ALONE (thanks Calvin Harris).
Allowing bills to get on top of you can be difficult to avoid, but with the introduction of Open Banking this year, irreversible punishment for simply being forgetful or having minor cash-flow problems will become a thing of the past.
While credit scores in Australia were previously calculated from negative activity alone, the introduction of Comprehensive Credit Reporting (CCR) in 2019 finally gave Australians a chance to improve their credit score, helping customers to view all of their credit history- including the positive areas.
Before open banking becomes active and your credit data is shared across Australian financial institutions, it’s a good idea to improve your credit score.
We have some tips for you, but first…
What is Open Banking?
Open banking was put into force in the UK and Europe in 2018. This gave the public more control over their banking data. Banks must now securely share financial information electronically with trusted third-party developers through the use of API’s. Adopting this same concept, open banking will be arriving in Australia as early as February (for the big 4 banks). This means a more transparent banking experience. No longer will you be punished irreversibly for missing a bill payment or for making multiple credit inquiries.
So, with the combination of CCR and OB, it will now be much easier to:
View your credit activity.
Find better interest rates.
4 top tips to improve your credit score before Open Banking comes into effect
1. Check your Credit Score:
Being aware of your credit rating can help to keep you on top of things. It might seem a daunting task, but if you are aware of your current situation then you can establish how to regain control before things start to get out of hand.
You can check your credit score online for free from companies such as: Moneysmart and Equifax.
If you find that things are out of hand then we can help with credit repair…
2. Check your credit data is correct:
Use the CCR to your advantage and ensure that there have been no mistakes made on your behalf. Credit providers have been known to make errors with the status of people’s debt.
3. Pay off any affordable debts in full and on time:
Paying off bills can be stressful, but making payments in full can really boost your credit score. Completing payments in full make you a low risk to potential lenders.
If you can pay as many of your bills on time then you’ll also be setting yourself up for a respectable credit score. No late repayments means a healthy rating and no need to repair credit.
4. Take caution when applying for loans:
Applying for multiple loans at once is a damaging process which can be so easily avoided. Using comparison websites can be a great way to determine which lenders can provide you with the best rates, fees and features. Not only can you save money by choosing your lenders carefully, but you can also protect your credit score.
In addition, check your eligibility before applying for a loan. If you’re not confident that you will be granted a loan then be aware that rejection can leave a mark on your credit rating. Before applying for a loan; work out what you currently owe, what fees and charges the new loan will bring, and whether you can realistically afford it or not.
Open banking is exciting. If you accept help with credit repair before it becomes active then you will put yourself in a good position to be accepted for loans in the future. For more information on what Open banking is, check out this article on the gov.au website.