Easy ways to boost your credit score

Easy ways to boost your credit score

Easy ways to boost your credit score

 

Easy ways to boost your credit score

Most Australians are only vaguely aware – or completely unaware – of the fact that credit-reporting agencies monitor their financial transactions.

While most Australians don’t give much thought to what’s on their credit report, the credit score that’s based on the contents of that report can have a significant impact on your financial choices. A modest score may mean you miss out on getting a mortgage or business loan.

There’s no shame in relying heavily on your credit card or delaying bill or loan payments to help ride out the financial impacts of the pandemic. However, it is worth understanding how the financial decisions you’re making can affect your creditworthiness.

Know the score

Australia’s credit reporting agencies make it as easy as possible for people to access their credit scores. You should be able to get a free copy of your consumer credit report by contacting the relevant credit-reporting agency or putting in a request via its website.i

The two big players in the credit-reporting industry are Equifax and Experian, but Illion may also have a ‘consumer credit report’ on you. If you’re based in the Apple Isle, the Tasmanian Collection Service will be keeping an eye on whether you’re paying your bills.

Credit scores range from 1 to 1000 or 1200, depending on the agency rating it. If you discover your score is around 500 or better (again, depending on the agency) you can take comfort in the knowledge you’re of above-average creditworthiness. If your score is lower, there are some simple remedies.

Credit repair 101

While credit reporting agencies guard the finer details of their credit-score calculations, they are transparent about what will cause people’s credit score to fall and what is required to rectify the situation.

Here’s what you need to do to boost your creditworthiness.

Sort out any unpaid bills

People often discover unpaid bills – the technical term is ‘delinquencies’ – on their credit report that they either didn’t know existed or which they assumed were ancient history and covered by a statute of limitations.

If you’ve been wrongly charged for something, act quickly to get the charge removed. Start by contacting the business that has mistakenly billed you. If that doesn’t resolve the issue, contact the credit reporting agency.

If you’ve been legitimately charged but didn’t get the bill or were unable to pay it, contact the creditor and negotiate repayment arrangements.

Stop applying for credit

In the current unpredictable environment, it can be comforting to know you have access to plentiful credit in an emergency. But credit agencies view multiple applications for credit in a short period of time as a sign of financial distress, so think twice about applying for another credit or store card. Even if you don’t ever get the card, the fact you’ve enquired about doing so is listed on your credit file.

On this point, it’s worth considering alternative options before applying for credit. While applying for JobKeeper or JobSeeker, or withdrawing money from your super account, may have other financial implications, your credit score won’t be impacted.ii

Don’t put off paying bills for too long

The Australian Banking Association recently announced that borrowers who have deferred bank loans will not have their credit rating affected until at least March 2021.iii That’s welcome news, but don’t assume all companies will be as generous.

Unless the business you owe money to has put in place other arrangements, if they send you a bill for $150 or more and you don’t pay it off within 60 days of the due date, your late or missing payment will stay on your credit report for the next five years.

Get on the front foot

Even if you think you’ve been careful in your spending, debts can quickly mount up or get lost in the bottom of a drawer, so it’s worth getting into the habit of checking your credit score from time to time just to be sure.

This is particularly important if you are hoping to borrow money to buy a home, start a business, or for a major purchase. If you’d like advice about getting your finances back into shape and maximising your ability to access credit in the future, please call.

i https://moneysmart.gov.au/managing-debt/credit-scores-and-credit-reports

ii https://www.societyone.com.au/blog/early-access-to-super

iii https://www.smh.com.au/business/banking-and-finance/credit-rating-amnesty-for-loan-deferrals-extended-20200913-p55v5y.html

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


“Hey what just happened to my super balance?” — How Shares and Other Asset Classes Perform Over Time

Depending on how your Super is invested, you may have noticed your balance drop quite a bit in value soon after the COVID-19 pandemic took hold. If a significant portion of your portfolio is invested in the share market, a widespread drop in share prices would be a likely cause. Share markets suffered quite large losses as worries about the crisis spread.

At such times, it’s only natural to wonder if investing in shares is the right thing to do.
This is a question about Asset Allocation. And the best way to answer it is to consider your investment objectives.

If you’re a longer-term investor, with a time frame of five years or more, you’ll be hard pushed to achieve reasonable objectives without the benefits of growth investments such as shares or property.

Growth investments experience greater volatility than other classes of assets. In other words, their prices experience larger swings – in both directions – up and down. Even so, good quality assets, bought at reasonable values, whether shares or property, will generally rise in value over time.

Average Rates of Return

When you invest in growth assets it is important to understand you should be targeting an average rate of return. In this context, average means taking the rate of return over successive years and calculating the average.

Some years you may achieve returns well in excess of your target, while in others, the return may be lower, and sometimes negative. But so long as you achieve your targeted average over the longer term you will meet your objective.

It’s also important to understand that different asset classes will outperform, or underperform in different years. You can see this effect at work by looking at five major asset classes over the 10 years to June 2018.

Occasionally the asset class which outperformed in one year showed a poor, or even negative, return the following year. This illustrates the importance of having a diversified investment portfolio covering all the major asset classes.

Financial year returns for major asset classes

Year to 30 JuneCashAustralian Fixed InterestListed Property Trusts (Aust)Australian SharesInternational Shares
20103.9%7.9%20.4%13.8%5.2%
20115.0%5.5%5.8%12.2%2.7%
20124.7%12.4%11.0%-7.0%-0.5%
20133.3%2.8%24.2%20.7%33.1%
20142.7%6.1%11.1%17.6%20.4%
20152.6%5.6%20.3%5.7%25.2%
20162.2%7.0%24.6%2.0%0.4%
20171.8%0.2%-6.3%13.1%14.7%
20181.8%3.1%13.0%13.7%15.4%
20192.0%9.6%19.3%11.0%11.9%
Average3.0%6.0%14.3%10.3%12.9%

Source: Vanguard Interactive Index Chart. All figures shown are before fees and taxes.

Always remember…

  • Seek professional advice to choose appropriate investments for YOU. These should have been well researched for their financial soundness, whether they are individual investments or managed funds.
  • Be sure to have a portfolio which is diversified across major asset classes and subclasses. The balance of the portfolio should be designed to achieve your long-term objectives at an acceptable level of volatility. Diversification is harder to achieve when you’re starting out – but becomes easier as your portfolio grows in value.
  • Try not to panic when you see values fall. It is human nature to be concerned when you see the value of your assets fall. However, markets eventually recover and a sound investment will perform over the longer term. Selling after a downturn will not help you achieve your objectives.
  • Review your portfolio at least annually to ensure it is still appropriate to your objectives and market conditions.
    Past performance is no guarantee of future results.

Would you like advice on managing your investments?

Contact House of Wealth today for a free financial planning consultation.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


So, What is Financial Planning Exactly?

People tend to think of Financial Planners as the people you go to when you have money to invest.

In other words, you don’t really need them unless you’re wealthy.

In fact, investment advice is just one aspect of what Financial Planners do.

Moreover, we work with people of all income levels.

So, what do we do, exactly?

Broadly, we use our knowledge to help you achieve your goals and objectives by tailoring strategies to address your specific needs.

In particular – we provide assistance and guidance on:

  • Budgeting – reviewing your finances and identifying opportunities to manage debt and save money. Far from being restrictive, a well-constructed budget gives you the confidence to spend on things that are important and necessary week to week, whist ensuring you’re on track to achieve bigger, or long term financial goals -e.g. buying a home, putting your kids through Uni, getting started with a property investment portfolio etc.
  • Risk Management – guiding you on protecting your family and your assets in the event of illness, injury, disability, or death.
  • Tax Planning – because we’re connected to an accountancy practise, we help you minimise tax through a variety of means, including ownership structuring with trusts etc and optimal distribution of assets among family members to maximise allowances.
  • Government Benefits and Allowances – determining your eligibility for the many different types of government assistance and benefits, such as pensions, family benefits, co-contribution allowances. And ensuring you receive the correct entitlements.
  • Retirement Planning – helping you find answers to the important questions such as; “how much money do I need to retire?”; “what do I need to do before I retire?” and “will I be able to retire comfortably now?”
  • Estate Planning – we show you how best to structure your assets to benefit your estate when you are no longer here.
  • Education on Financial Matters – helping you to understand your investments and other key financial matters. This builds your knowledge, confidence and ultimately makes you more capable of achieving better financial outcomes for you and your family.

One of the most important first steps of financial planning is to start thinking about important goals you would like to achieve.

Another is simply to get started on your Financial Planning journey as early as possible. This will help sharpen your financial senses and develop an understanding of what needs to happen, and by when, for you to realise your goals.

The main advantages of having a professional planner help you are:

  1. You benefit from greatly your planner’s knowledge, experience and perspective on financial matters.
  2. Working with a planner makes you accountable as your planner acts as a kind of financial coach. Checking in with you to make sure you are following through on your plan.
  3. Besides all that, your planner will also help you make sound investment decisions and provide you with periodic valuations of your investment portfolio.

Are you interested to know more about working with a financial advisor?

Contact House of Wealth today for a free consultation.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


What Will A Good Financial Adviser Do For You?

Some may think a financial adviser’s role is to forecast the direction of the share market from month to month and invest clients’ money accordingly.

This is not the reality, of course. Investments are only one small part of what your financial adviser can provide for you.

Here are just a few ways you can benefit from having a good financial adviser in your corner.

Building your Financial Knowledge and Awareness

Consider for a moment the vast numbers of websites, printed articles, and media broadcasts dedicated to financial topics these days.

Australians are bombarded with so much financial information these days. But to really understand it and be able to use it to your advantage takes considerable knowledge.

Whether it’s the latest share market activity, economic news or the constantly changing tax and superannuation rules, we can answer your questions, warn you of issues you may not be aware of and save you the many, many hours you’d have to spend researching it all yourself.

And as we provide you with ongoing advice – you naturally develop your own knowledge.

Money and time

Usually the benefit you receive from a financial adviser can be spelled out in dollar terms.

That might be the income tax you have saved by re-structuring your salary, or a new concession from the Australian Tax Office (ATO) or Centrelink that you didn’t know you could get.

If you agree that time is money, then think about the time we’d save you when you make important decisions.

If you had to do it all yourself, how would you choose the most appropriate super fund, investment options, or insurance cover? How frustrated would you be stuck on the phone trying to get regular information from government departments?

With all this confronting you, it’s no wonder that many important financial decisions stay in the “too-hard basket”.

Remember, we deal with these things every day. We are in an ideal position to explain everything you need to know, and to simplify your options.

Client’s best interests

The finance section of your newspaper news website probably includes a regular “advice” or “Q & A” column.

By law, these columns must warn readers that the advice does not take into account your personal situation or needs and you should consider its appropriateness before acting.

In setting your financial strategy, we don’t use this “general advice warning” because we have taken the time to get to know you and your circumstances.

This means that everything recommended to you—the investment portfolio, super contribution strategies, savings plans and insurance advice—is tailored to your personal needs, goals, and tolerance to risk.

As the years go by, your financial strategies will need adjusting due to changes in the broader environment or something closer to home. Whatever the case, we are here to help you make the most of the good times and the bad.

And meeting us for a review doesn’t always mean major changes, but at least you’ll know that you’re on the right track – and not having to do it alone.

Some Questions to Ask Yourself

    • Do you wish you knew more about financial matters?
    • Have you sometimes wondered whether you’re not receiving Centrelink benefits you’re entitled to?
    • Do you wonder whether you’re doing the best thing with your Super?
    • Do you think not having the answer to important financial questions may be adversely impacting your financial wellbeing?

If you answer yes to any of those – why no book a consultation with the House of Wealth Financial Planning team. You’ll get some answers to your questions and a much better perspective and understand of what is possible.

Better still – the first 30 minutes will cost you nothing!

Nothing ventured nothing gained. And at the end of the day – what’s to lose?

Some may think that a financial adviser’s role is to forecast the direction of the share market from month to month and invest clients’ money accordingly.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.