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Ask the importance of credit score from people who rely heavily on credit cards for their day-to-day transactions or frequently needs loans for their special needs. Technically speaking, credit score refers to the score that your financial institution offers you on the basis of your performance in using your credit cards and paying the bills. These days, everyone in Australia likes to have a quality credit score and why not? The higher the credit score, the more chance you have of getting credit when you need it. So it’s not at all a bad deal to start working on improving your credit score.

To begin with, first, assess your current situation, which means where do you stand today – what is your existing credit score? This will help you establish a goal for yourself and will also help you know the gap – how far you need to push yourself.

The best way for Australians and others to save more money yet improve their credit score is not by spending more but by maintaining a good difference between their usage and their credit limit. Try not to use more than 30-35% of your credit limit so that a considerable gap is maintained and then make it a point to pay all back a week before the due date so that your scores can be boosted. This is because the credit bureaus calculate the credit score on the basis of the balance in your monthly statement. So piling up big balances can really damage your credit score.
This also indicates that you should first offer to pay the card whose balance is closest to its credit limit so that the scores are maintained.

Additionally, do not throw away your old credit cards. The older the credit history, the better is your position. If you stop using your older credit cards, the report sent to credit bureau will not be weigh substantially when arriving at your credit score. So, keep using your older cards for small, cheap transactions and pay them in full before time.

Wrapping up, do not remain in the illusion that spending wildly can lift your credit scores. Instead, go for the cheapest solution of using your credit cards moderately and paying them before or on time.

This entry was posted on Wednesday, May 20th, 2009 at 10:02 am and is filed under Credit Score. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.