Optimizing the Amount You Can Borrow: Tips from the Team at We Fix Credit
Are you finding you can’t achieve the loan you were hoping for, or your broker has advised that you’ll get a better result if you fix your credit rating . . then it’s time you take steps to fix your credit and improve your credit score.
If you need some help, check out the team at We Fix Credit who can help you make informed decisions and offer expert credit repair solutions tailored to your needs.
A common myth is that closing credit cards will improve your credit score. However, this can actually harm your credit. Understanding how credit scores work is crucial when considering actions like this, and the team at We Fix Credit can provide expert advice tailored to your situation.
How Credit Scores Work
Credit scores are calculated based on factors like payment history, credit utilization, length of credit history, types of credit, and recent inquiries. Closing a credit card that’s been open for a while can impact several aspects of your credit score, often in a negative way. While opening new unsecured credit facilities can also initially lower your score, paying the account on time will eventually help increase it.
The team at We Fix Credit can help you avoid common mistakes and offer personalized credit fix solutions that protect your score. Credit scores cannot be predicted as each credit reporting body uses its own unique algorithm. These algorithms produce individual scores based on various factors, such as the age of your credit report, the number and types of inquiries, and their frequency over a five-year period.
Other key contributing factors include your residential stability and the demographics of your current residence. Repayment history with open consumer credit facilities makes up around 35% of your total credit score.
Impact on Credit Utilisation
Credit utilization refers to the amount of credit you’re using compared to your credit limit. A lower utilization ratio indicates better credit management and can boost your score.
When you close a credit card, your total available credit decreases, raising your utilization ratio, which can damage your credit score. The team at We Fix Credit can guide you in managing your credit utilization and keeping your score healthy.
Effect on Length of Credit History
The length of your credit history contributes to 15% of your credit score. Closing old accounts, especially your oldest ones, can shorten your credit history and make you appear less experienced with credit. This can lower your credit score. Before taking any steps, consult the team at We Fix Credit to find the best way to fix your credit without causing unintentional damage.
Changes in Credit Mix
A diverse credit mix, including credit cards, mortgages, and loans, helps your credit score. Closing a credit card may reduce this diversity, which could negatively impact your score. The team at We Fix Credit provides tailored strategies to improve and maintain your credit mix for optimal results.
Tips for Managing Credit Cards
Instead of closing credit cards, consider these strategies:
- Pay off balances: Keep your accounts open while reducing your balances. This lowers your credit utilization and boosts your score.
- Use cards sparingly: Make small purchases and pay them off monthly to keep your accounts active and show responsible use.
- Monitor your credit: Regularly review your credit reports to stay informed and catch any errors or suspicious activity early.
Fixing your credit can be challenging, but with the right guidance, it’s achievable. Don’t let myths about credit scores lead you down the wrong path.
Contact the team at We Fix Credit today for a no-obligation discussion on 1300003655. They can help you fix your credit score with expert credit repair solutions tailored to your needs.
This article first appeared in wefixcredit.com.au.
