Building a strong credit score can be as simple as ABC and is one of the best financial decisions you can make. A solid credit history opens doors to key opportunities, giving you greater control over your financial future.
A high credit score improves your chances of loan approvals, better interest rates and greater financial flexibility. Lenders use this score to assess your creditworthiness based on your financial behaviour, Brett Caminsky, director of Atlas Finance, says.
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Caminsky says it is really worth the effort and you can use these four ways to build a strong credit score:
Check your credit report regularly
It is essential to check your free credit report and know your credit score, especially if you have taken out credit or plan to do so in the future. Caminsky says regularly reviewing your report keeps you informed about your financial standing and helps you to spot any errors or discrepancies that could negatively affect your score.
These may include incorrect late payments or fraudulent accounts opened in your name without your knowledge. Detecting issues early allows you to take corrective action quickly, protecting your credit health and ensuring lenders see an accurate reflection of your financial behaviour. You can get one free credit report a year from any of the reputable credit bureaus.
Only use credit you can afford
It is important to spend only what you can afford to pay back. Remember, the credit you take should be manageable and in line with your income.
Since most people pay taxes, the money that goes into your account when you get paid is your net pay and what is left after you pay your monthly expenses is what you can use to repay credit. Make sure that you can comfortably pay back the credit you take up.
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It helps to pay your bills on time
One of the most influential factors in your credit score is your payment history. Lenders want to know that you can manage your financial responsibilities and therefore it is important to consistently pay your bills, whether retail store cards or other loans.
This has a significant effect because timely payments show lenders that you are reliable and responsible with credit. A history of on-time payments improves your credit score over time, making you a more attractive candidate for credit.
Beware of opening too many new accounts at once
Every time you apply for credit, lenders conduct a hard inquiry on your credit report. Too many inquiries in a short period can temporarily lower your score, making future approvals more difficult.
More importantly, if one lender declines your application and you immediately apply elsewhere, repeated rejections can signal financial risk to other providers.
Instead of rushing into another application, take a step back. Firstly, check your credit status to understand where you stand. Then assess what you can realistically afford. Addressing the root cause, whether it is high debt, missed payments or excessive inquiries, can help you break the cycle of rejections and rebuild your creditworthiness before applying again.
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Caminsky says you must always agree on clear terms with your lender, including the instalment amount and payment date.
“By authenticating the mandate, you agree to the date when your account will be debited and the amount that will be debited each month and make sure to stick to your commitment by paying on time.
“A good credit score has a clear and positive impact, often making the difference between having your credit application approved or rejected.”
