With most of us confined to our homes and unable to go about our usual business, it is a great opportunity to not only look after your physical health, but your credit health as well.
A primary indicator of your financial wellness is your credit score or credit rating; it is like taking your credit health’s temperature.
Your credit score is drawn from your credit report, and is made up as follows:
The higher your credit score, the better as it means that you are a low risk customer to the credit provider. The lower your score, the higher the risk you present to the credit provider.
Information does not stay on your credit profile forever, therefore you can improve your credit score by being responsible with credit.
A credit report is a record of your borrowing behaviour, and is compiled by credit bureaus. It includes:
Your credit profile shows how you manage your money and how responsible you are when it comes to repaying debt. It tells credit providers how creditworthy you are, in other words, how likely it is that you will pay back a loan according to the terms of the credit agreement.
Also, when you apply for a job, the company might want to see your credit profile, and when you want to rent a property, the letting agent will definitely look at it.
The short answer is: by managing your money. Here are some practical tips that you can implement right now:
By managing your money well, you make it possible for yourself to get credit when you might need it. A good credit score will show a credit provider that you are creditworthy, while proper budgeting and careful spending will improve your affordability rating.
As with your physical health, credit health takes focus, effort and good habits, but the results are definitely worth it.
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