Applying for credit: Whenever you apply for credit, whether it’s from a bank (even if you’re an existing customer), a personal loan company or for a credit card, a new credit check is made. A credit check is when an organisation reviews your financial history before approving your loan request or accepting you as a customer. The good news is a new law came into effect on 1 October, 2019, which means lenders such as Harmoney, can now make a "quotation enquiry" on your credit file in the first instance. This means we can give you a quote on your loan terms before you complete a loan application. This quotation enquiry will be recorded in your credit file, but cannot be used by a credit bureau to assess your credit score. A credit check will only be reflected in your credit score should you choose to progress from a quote to a loan.
Frequent card transfers: Transferring credit card debts to zero interest cards can be an appealing and effective way to pay back the outstanding amounts without having to pay high interest rates. If you need to apply for a new card to transfer the balance, this will impact your credit score. It will also impact your score if you require a limit increase on a card to accommodate a transfer.
The average age of your accounts: This is all about the length of your credit history. The longer you've had your accounts the more a pattern of your financial behaviour can be determined by creditors or lenders, which can be an indicator of risk. If you have a lot of newly established accounts, it is harder to determine how good you are at managing your accounts.
Frequent change of utility providers: In some situations, frequent bouncing around between power, phone or internet providers can raise credit alarm bells. Again, while you may just be chasing the best deal, each time you sign up for a new account a credit check is requested. Each request is added to your credit file and can hurt your credit score. That’s not to say you shouldn’t switch for a better deal, just think about how often. You could also talk to your existing provider to see if you can get better terms, using an offer from their competitor as a bargaining chip.
Not paying your bills on time: OK, this one is a little more obvious, but we don’t mean just the big bills like a loan, a mortgage, rent, or a car payment. It means keeping across all your bills to ensure you're paying on time. Any bills overdue by two months for a debt of $150 or more will impact your credit score. It's good practice to make sure you know exactly what’s going out when and that it’s paid on time - or cancel anything you’re paying for but not using! Which brings us to...
The good news!
Comprehensive Credit Reporting means, your credit score is no longer just impacted by the bad stuff. Everything you do well - debts paid off, bills paid on time - also counts toward your score, meaning a few simple changes and some financial tidying up on your part may mean you can improve your credit score quite quickly.
We write these articles for you, our Harmoney borrowers, to be, what we hope, are helpful tools for different aspects of life. The information is designed to be a general guide only. As you read, you should consider how - or if - the information might apply to your circumstances, and consider if your needs mean you should seek further advice from an expert in that particular field.
Read more in Credit Score Bootcamp