04 Mar Credit Boost Facts You Should Know – Part 1

There is no denying that your credit report is vital to your financial stability. The role it plays in everything from determining your loan credibility to securing you your dream job is far greater than many people realise. A strong credit profile opens doors to new opportunities, better interest rates, and higher credit limits, but how can you boost your credit enough to change your creditworthiness?

Improving your credit score and overcoming financial setbacks are key to getting on the right track. At Credit Boost, we are here to help you clear your credit report with proven strategies that can positively impact your life. Here are some credit boost facts you should know.

Use your Credit Card Responsibly

A credit card gives you the power to make or break your credit score, and puts you at risk for debt problems if you cannot manage your spending. Reckless credit is a whole other ball game and involves credit granted to an individual without a proper affordability assessment to ensure that it can be repaid without causing financial hardship.

While all this is true, if you use your credit card wisely, it can be a very effective tool for building a good credit profile. Lenders want to see that you can borrow money and repay it on time, as this demonstrates reliability and discipline. Use your credit card for daily purchases like petrol and groceries, and be sure to clear the full balance before payment is due. Boost your credit score today with your credit report to work from!

Maintain a Low Credit Utilisation Ratio

Your credit utilisation ratio is another factor that determines your overall credit score. This ratio is basically the percentage of your available credit that you are currently using. If it’s too high, it signals to lenders that you rely heavily on credit, while keeping it on the lower side shows that you can manage your money and have the capacity to take on additional credit without difficulty.

We always suggest that consumers keep their credit utilisation ratio below 30%. To give you an idea, if your credit limit is R10,000, don’t spend more than R3,000 of that credit at any given time. Here is how to check your credit score without harming it.

Keep Your Debt-to-Income Ratio Low

Lenders consider your debt-to-income (DTI) ratio to decide if you are a liability when considering your loan application. This rate indicates your monthly debt repayments compared to your income before tax and deductions. It is best to keep your DTI ratio below 36%, while anything beneath 43% may still be acceptable. If your struggling with debt, consider debt review to recover your financial freedom.

Understanding the role of your debt-to-income ratio in the loan approval process is important, as it is one of the first things that stands out to a lender when they review your application and credit profile.

Make All Payments on Time

Payment history is easily the most important factor in your credit score calculation, which makes perfect sense. Even one late or missed payment can negatively impact your credit score, which can take months or even years to recover from. Consistency is an essential part of rebuilding your credit score and improving your loan application success.

One way to keep up with all your payments is to set up debit orders for all your recurring accounts, simplifying your planning. We cover more strategies in Credit Boost Facts You Should Know – Part 2.

Make use of our FREE CREDIT CHECK to get started! We are here to help you boost your credit and recover your financial freedom.