The importance of a solid credit score is not known to all, it determines our credit risks and successes either as employees or entrepreneurs. A bad credit score denies you the chance to obtain credit or increase your cost of borrowing, this limits our ability to grow financially or meet our obligations. Given the value of good credit scores it is important to know what steps to follow to ensure that you score highly in terms of credit levels. It is important to note that this is not something that will happen overnight, it takes time and patience.
Know your credit score
You cannot build on what you do not know, therefore first establish your credit score. This can be done through obtaining your credit report. The report will tell you whether you have been affected recently or if there are any mistakes in the determination of the score. You may not know this but the law entitles you to a free credit report at least once per year. Use this opportunity to establish your credit score and then work from a point of information. Visit govt.nz for more information.
Get credit and pay up
If your credit is at a level where you can be advanced some more credit, take it (if it is affordable) and ensure that you pay promptly; this will add good credit history. If you opt for credit cards, you will have an opportunity to spend and pay back in an agreed period. Ensure that you pay these obligations on time, this will increase your limit and also reduce the charges.
Avoid carrying high balances
Your credit score is determined by several factors, one of the components is the ratio of your available credit versus the used amount. Pay attention to the amount of credit you are taking up in relation to the card limit.
Do not open multiple accounts, all at once
Opening several accounts at once dips your credit score. The amount of credit that you obtain at any given time can affect your score negatively.
Get a secured card
This is a card that takes cash up front, this is used as a collateral, and the limit is set. Make sure you pay off the credit on time.
Following these simple steps will help you create a solid credit score; you will be in a position to borrow more and at a lower cost. Remember that it will take time to achieve this, therefore be patient.