5 Ways to Improve your Credit Rating

There are typically 5 key factors credit bureau’s analyse when taking your credit rating into account. Therefore, there are 5 methods around these judgements you can take advantage of to improve your credit rating.

What’s Taken Into Account for my Credit Rating?

• Payment History: How consistently you make your repayments on time. – 35%
  Total Amounts Owed: Your Debt:Credit ratio. The lower the better. – 30%
  Length of Credit History: How long you’ve had your lines of credit open for. – 15%
  New Credit: How often you apply for new lines of credit. – 10%
  Type of Credit in Use: May influence whether the credit you’re applying for will be approved. – 10%

What can I do to Counter these Factors?

The biggest no-brainer to improve (or slowly repair) your credit rating is to continue or begin making all your repayments on time. This will prove to the banks you’re a responsible client, who they won’t have to hassle for repayments yet still earn interest from.

Second is your debt:credit ratio. Regardless of how much you earn, a $3000 balance on a $5000 limit card is much worse than a $3000 balance on a $10000 limit card.

The $5000 limit card would have a debt:credit ratio of 60%, as opposed to 30% on the latter card.

Next comes the length of credit history. A customer who has made his repayments on time and been financially responsible for 3 years on his account will make a much larger impact that someone of the same financial calibur for 3 months.

Likewise, somebody has been irresponsible with their credit card or other forms of credit for 3 months, won’t have as big of a negative impact as 3 years on the downhill.

Although banks and financial providers enjoy lending new credit, it is a sign that you’re under constant financial stress and relying on borrowing money to get by. This ‘loose’ financial nature is un-assuring to the banks, and as a result you should limit how frequently you apply for new credit.

Finally, the type of credit can have different weighting factors. For instance, the impact on your credit score for managing an expensive mortgage will be heavier than that of a teenager managing a student credit card.

In summary:

• Make your repayments and fee payments on time.
• Reduce your debt:credit ratio (carrying out a balance transfer to a credit card with a higher limit can be successfully utilized).
• Keep your old/current accounts open for as long as possible. This will improve your length of credit history.
• Try to only apply for new credit when you truly need it.
• Keep in mind how serious your line of credit is. If you can only pay off one out of two of your credit lines at one time, choose the one which you believe would make a bigger impact on your credit score. If you are managing more than one credit card, always attempt to reduce the one(s) with the largest balance as well.

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0