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A healthy credit score is a powerful financial tool that can influence everything from the interest rates you're offered on loans to your ability to secure housing, finance a car or even start a business. In this blog post, we’ll outline five practical steps to enhance your credit score in the short, medium, and long term.
First, get your credit score and credit report and check your details for inaccurate or incorrect data regarding your personal information like mailing address, ID numbers or former employers, as well as errors in your credit history or accounts, and any credit enquiries by lenders you don’t recognise. These could merely be simple errors — or signs of fraudulent activity.
If you find inaccuracies, dispute them immediately. You can do this by contacting your creditors or the credit bureaus. At TransUnion, you can lodge an online dispute, making the process fast and easy.
Next, find issues that could lower your credit score. This could include accounts where you've missed payments or underpaid, credit cards with high balances, or judgements or administrative orders by courts because you failed to pay debts.
You can manage these issues by signing up for automated payment services. This helps ensure you pay off old debts and make all your payments on time — a key factor in maintaining a good credit score.
If you have balances of more than 35% of your available limit on any credit cards, create a payment plan to reduce those amounts. For example, if you have an account with a R1,000 limit, try to keep the amount owed to under R350.
You can also add a brief explanation about an issue in your credit report. This is beneficial if there's a special circumstance you want anyone checking your credit report to understand.
After you've started addressing problem areas, follow up by checking 30–60 days after you pay off debts to make sure your credit report reflects the improvement.
Work to maintain a healthy mix of credit (e.g., store accounts, credit cards, home loan and service contracts like cell phone accounts) to establish a strong credit history.
Don’t make too many credit or account applications within a short time. Doing so can indicate a sudden financial need that could lower your credit score.
The most effective long-term strategy for maintaining a good credit score is regular monitoring. The powerful TransUnion True Identity credit monitoring services notify you of critical changes, helping you quickly identify and address potential issues, as well as perform other essential tasks.
If your credit score has taken a hit, don’t despair, you can bounce back. Rebuilding your credit profile may take time, but with consistent effort and the right actions, you can regain your credit confidence and achieve your financial goals.
Start today by monitoring your credit and making a plan to improve your financial health. Your future self will thank you.