How to avoid a bad credit score this Christmas

There’s no positive way to spin it. Having a bad credit score simply isn’t a great thing to have, and there are several ways it could put a strain on your lifestyle. This might include trouble renting an apartment (as landlords often do credit checks), higher insurance premiums and greater difficulty when getting approved for a home loan.

While individuals with a bad credit rating could face extra financing challenges, it isn’t necessarily areason to panic. Specialised lenders such as Redrock provide bad credit mortgages designed for people in such circumstances.

With Christmas right around the corner however, it could be easy to overspend and worsen your credit score. According to a November 27 release by the Australian Retailers Association, people in the country are forecast to spend $2.8 billion on purchases online this Christmas. It’s no doubt that many of these transactions will involve a credit card, as they often do. If you’re trying to get your credit rating back up to health, the last thing you need is to have it take a hit amidst the craze of gift shopping. So let’s take a look at a few ways you might unexpectedly hurt your credit rating. Don’t let online Christmas purchases cost you more than just money.

Doing more than the minimum

When lenders check your credit rating, they’re wanting to see how responsible you are when you use them. It’s not simply about paying off bills on time or the bare minimum. The greater the ratio of the outstanding debt, the worse it’ll do for your rating.

Furthermore, VedaScore shows that there are varying levels of risk with lenders in different industries. For instance, spending with a credit card could carry a different weight of risk compared to taking out a low doc loan. It’s good to understand this, which will give you a clearer picture on how to keep your credit rating from slipping.

Jumping ship.

With so many new offers from banks turning up at every corner you turn, it could be tempting to sign up for every line of credit you see – especially in this season of spending. However, doing this on a regular basis could harm your rating. VedaScore mentions that credit enquiries you have made in the past 12 months, as well as how many different lenders you have requested credit from will be taken into account.

With these tips in mind, you can learn to observe your credit habits. In the meanwhile, get in touch to see how you can take advantage of bad credit rating loans if you need financing for a home.