It takes a long time to accumulate good credit. However, you only need to make a few mistakes before your credit score takes a turn for the worse. A bad credit score will prevent you from accessing funding. Even though you can still apply for bad credit loans from Cash Relief in Auckland – if you want to maintain a healthy credit score, here’s how to avoid bad credit.
Pay Your Bills On Time
The simplest way to avoid getting bad credit is to pay your bills on time. When paying instalments on a loan, you should pay each instalment in full. When paying your bills, you should always try to be punctual or even pay early if possible. Banks and lenders will never say no to early payments, and it looks good on your record.
Don’t Get Too Close To Your Credit Limit
Part of your credit score is calculated based on how much credit you have available in comparison to your debt. Therefore, even if you’re paying bills on time and in full, your credit score will still be affected if you’re too close to your limit. It shows that you’re close to living beyond your means, and could default on payments if you lost your income. Try to keep below half of your credit limits.
Pay More Than The Minimum
When you borrow money, the lender will stipulate a minimum payment that must be repaid every month. It shows that you’re capable of making repayments, and it protects their investment. However, if you only pay the minimum, you might not be able to apply for more credit, and it shows that you struggle to pay more – which doesn’t look good for you.
Occasionally Use Your Zero Balance Credit Cards
In New Zealand, closing an account or paying off your credit card – and therefore having a zero balance – can negatively affect your score. You want to prove to lenders that you have control over your money, and are capable of managing your debt by paying it off. If you have credit cards with a zero balance, it gives the impression that you have no self-control when it comes to spending money.
If you follow these guidelines, you should be able to avoid getting a bad credit rating. However, it’s understandable that sometimes you’re dealt a bad hand. If you lose your job, your finances will take a knock and all you need to get bad credit is to default on a few payments. Fortunately, you can still apply for a bad credit loan from Cash Relief in Auckland. Call us today for financial assistance.