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Money Management for Your Credit Score: Full Credit to You

Life is better with good money management skills: you’re less stressed and worried about your credit rating, indulge without guilt. But the even better news is that anyone can improve their approach to personal finance. The key is to check where your money’s going, and then make changes that serve you and your financial goals. Read on for basic finance tips - including how to improve your credit score.

What is a credit score?

How to kick a few goals.

A credit score is a number that reflects your current level of credit risk, based on past financial behaviour. Your credit score is calculated by credit reporting agencies, who examine the money you’ve borrowed and repaid from companies in the long term. Sources of information that can contribute to your credit history include bank accounts, loans, debts, and your current credit limit.

 

Each agency calculates results differently, but in general, a higher score suggests that you are in good financial shape. Lenders use these credit ratings as part of their criteria to determine if they’ll lend money to you, and under what conditions (the amount, rate of interest, and repayment schedule). A higher number will likely increase a lender’s confidence in you meeting your repayments and vice versa.

 

Credit Cards, of course, contribute to your score through their representation of your spending and repayment history. However, they can also help you maintain a favourable financial figure by helping you to manage loan repayments and pay your bills.

 

  • If you apply for a product or request to increase your product limit, we will perform a credit check. A credit check is when we ask a credit reporting body for information about other products you hold, have held or have applied for and whether you’ve satisfied your repayment obligations.​
  • The credit reporting body will record the fact that we have done a credit check. This will show on your credit report as a ‘credit enquiry’, and it may be disclosed to other credit providers or used in the calculation of your credit score by the credit reporting body.​
  • When a credit enquiry is recorded on your credit report, it can affect your credit score in different ways. It might go up, down, or stay the same. This depends on factors like the type of credit you're applying for, how many other credit checks you've had recently, and other details in your report. An enquiry is more likely to lower your credit score if you make a lot of credit applications in a short time.

Learn more about credit score from here.

Pay your bills on time: Clock up the savings.

Did you know that bills can be a type of credit? Household utilities are a great starting point if you’re wondering how to build a credit score: when you pay your bills on time, you’ve met your debt obligations to the utility provider by paying for what you’ve used by the agreed date.

 

Staying on top of your bills could save you money, as you’ll avoid any late fees - and a good example is that for some energy utilities there are pay on time energy discounts. The easiest way to pay bills - without having to remind yourself - is to set up automatic payments that are directly debited from your bank account, Debit Card or Credit Card. That way, you can save your energy for other things - like dining out with friends, putting down a deposit for a holiday, or finally snapping up that couch you’ve been thinking about for the past two weeks!

It pays to regularly pay off debt.

Reducing your debts makes managing money so much easier. Establishing a clear financial plan for paying off debt will create a consistent repayment history, which can be a beneficial way to improve your credit score. Managing your debt can also strengthen your borrowing capacity for larger and longer-term purchases, such as a new car, or your dream home.

 

Make sure you maximise any Card benefits that can help you to manage your repayments. Plan It ®, for example, allows Credit Card Members to pay down either recent eligible purchases or a portion of their balance, in equal monthly installments, with 0% interest, however, a monthly plan fee applies.1 Taking advantage of this feature means that you’ll know exactly how much to pay on your balance each month, which you can then factor into your spending.

 

Things get brighter when you’ve paid off debt, because you can then set aside the same amount you’ve been devoting to your repayments to savings accounts! Savings can create a stronger sense of financial security and freedom for you.

Tracking your spending and budget: Mind where your money goes.

Knowing where your dollars are going is crucial for effective money management. Peeking into your bank account to check its balance might be quicker and easier but tracking your spending will give you valuable insights into your personal finance: what you’re buying, where you can reduce or avoid overspending, and how these can inform your budget.

 

Budgets are a beautiful thing. Not only do they make spending money a breeze, but they also help you to manage debt, track income against expenses, and enable you to make spending decisions that align with your financial plans in the long term. When you budget, you hold yourself accountable to your goals, and have a guide that can help you make spending decisions that are tailored to you, and you are alone. But your budget should also give you the opportunity to spend money on things that make you smile - without detracting from your other monetary priorities. Your budget should also change over time, so it consistently reflects your financial position and obligations.

 

Tracking and budgeting will make your spending more mindful: you might even find it easier to shop at the supermarket, because you’ll be in the habit of examining prices and making lists to save money and stick to your grocery budget. No matter how your budget serves you, you’ll find that you’re lowering your financial risk by reducing your impulse purchases and managing unexpected expenses. These small steps can empower you to make bigger leaps in your financial journey, as your tiny habits create other positive financial decisions.

Use rewards to save: Get more than you bargained for.

The supermarket isn’t the only place where you can use savings to your advantage: your Card likely has rewards that you’ve yet to fully explore. Potential savings benefits that you may be able to access include Membership Rewards2 points that can be redeemed for credit, travel, gift cards3, and you can also do Select + Pay with Points for the purchase you made4 , and Amex Offers to earn bonus points or credits from purchases made at participating merchants. To top it all off, start your next trip by relaxing in The Centurion® Lounges5, or in one of our partner lounges, located in over 1,550 airport lounges around Australia and the world. Grab a drink and a snack while you check your emails on the complimentary Wi-Fi and enjoy the quiet of the lounge before your flight. Check which Cards are eligible for complimentary Airport Lounge access from here.

 

Navigating money management is a great step towards taking control over your financial plan in the long term. With these basic finance tools, you’ll be spending with more security and less strain.

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