Boost your borrowing power with 4 good financial habits

We all know that building good habits like nutritious eating and regular exercise can give our health a boost, but did you know that building good financial habits can actually help boost your borrowing power? 

Why? Because good financial habits make for a good credit score and your credit score has a big impact on how much you can borrow at any given time.

But first….

What’s a credit score and why should I know about it?

Glad you asked! They’re a lot like an Uber rating for your finances and every Aussie has one. Your credit score is basically a rating that lets prospective lenders know whether you’re likely to be a good borrower. In fact, it can even make or break your chances of getting a credit card application approved, a car loan or even switching mobile contracts or providers. 

But how is your credit score determined in the first place? It’s impacted by things like your current level of debt (how much you owe), your credit card and loan repayment history and whether you’ve defaulted on any loans in the past. 

Keen to know more about credit scores and find out what yours is? Learn more here. 

4 simple financial habits to boost your credit score

Boosting your credit score and keeping it in good form can be as simple as putting in place a few good financial habits:

1. Don’t miss credit card or loan repayments

Late and missed repayments on your credit card or other loans is one of the fastest ways to put a dent in your credit score. Because your repayment history for the past 24 months is taken into account with your credit score, keeping up with those all-important repayments will help you keep it in good form. 

2. Set up SMS alerts and automatic payments

Setting up automatic SMS alerts for your credit card and loan payments is super easy in your phone and it’s one of the best things you can do to make sure you don’t miss future payments. You can also set up automatic recurring payments so that your regular credit card or loan payments will be automatically transferred. Just set up once and forget. Too easy! Find out how you can set up automatic payments here.

3. Reduce credit limit and pay off debts 

It’s not just how much credit you draw down but the total amount of credit available to you that lenders will look at because your credit limit tells them how much ‘debt potential’ you have. Reducing your credit limit can help with that. Paying off any current loans or debts sooner rather than later should be a priority too. To pay down debt faster and give your credit score a boost, consider increasing your regular repayments rather than just paying the minimum amount.

4. Don’t max out your credit

Make sure you keep an eye on how much credit you’re actually using too - maxing out your credit cards or exceeding your credit limit on a regular basis is not a good look as far as financial responsibility goes. Credit cards can be convenient and good for managing cash flow but if you’re spending money you don’t (or won’t) have anytime soon, it can be hard to break the cycle. 

What’s my borrowing power?

Get an idea of how much you could borrow with our borrowing power calculator.

Looking to buy your first home? 

Get expert guidance from a Lending Specialist over the phone, via video call or in person to help weigh up your options, explore some great value home loan options here or use our home loan comparison tool to find out which home loan could be the best value loan for you.