When it comes to saving up for a big purchase, many people will turn to some form of credit to help them on their way. However, one of the barriers to getting the credit you need could be your credit history.
If you haven't applied for a loan or credit before, you may believe that you automatically have "good credit". A credit history doesn't just denote 'negative' events, it also acts a recommendation for credit providers where you have displayed good credit behaviour in the past.
Building a strong credit profile will stand you in good stead when the time comes to apply for credit. The good news is that you can build a strong credit history without digging yourself into debt.
Swiping your way to good credit
While credit cards' reputation may precede them, they can actually be an excellent way of demonstrating to credit providers that you can handle the responsibility of borrowing capital and making your repayments on time.
If you are the type of person who has never had a credit card, a phone contract or any other forms of direct debits, don't be fooled into thinking your home loan application will be easy. Having no credit history can be considered by credit providers as almost as bad as having a poor one.
For individuals without a credit history of any kind, it may be worth considering taking out a credit card - as long as you use it wisely.
Staying on top of your credit history
You can do this by only spending as much as you know you can easily pay back, even if it's just buying a few items per month. By paying your credit card payments on time, you will begin to see a definite change in your credit standing.
You might get yourself started with a low credit limit with no annual fees, and enjoy all the functionality of a normal credit card. Just make sure you keep on top of your repayments.
The good news is that you can keep track of your credit reputation by requesting a copy of your personal credit history. As My Credit File is a part of New Zealand's largest credit reporting bureau, Equifax, you can also have access to My Credit Alert - a monitoring service that allows you to keep track of any changes to your credit file via email updates.
Know & keep track of your credit reputation with My Credit Alert
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