How Can You Improve Your Behaviour Score?

Your behaviour score, often synonymous with credit score or credit rating, is a numerical representation derived from various factors. This score plays a crucial role in determining your eligibility for loans, credit cards, mortgages and other financial products. Understanding how to influence and improve your behaviour score can be pivotal in achieving your financial goals and securing your financial future.

Understanding behaviour score

Your behaviour score is essentially a reflection of your financial behaviour and management practices. It is calculated based on several key factors, each carrying a different weight in the scoring model. These factors include your payment history, credit utilisation ratio, length of credit history, types of credit accounts and new credit inquiries. Payment history, for example, accounts for a significant portion of your credit score. Consistently making on-time payments demonstrates reliability and responsibility, positively impacting your score. On the other hand, missed payments or defaults can have a detrimental effect on your score.

Factors affecting your behaviour score

Delving deeper into the factors influencing your behaviour score can provide valuable insights into how to improve it. Payment history, as mentioned, is paramount, accounting for approximately 35% of your overall score. Lenders want to see a track record of timely payments, as it indicates your ability to manage debt responsibly. Credit utilisation, the amount of credit you're currently using compared to your total available credit, also plays a significant role. Keeping your credit card balances low and avoiding maxing out your credit cards can positively impact your credit score.

Payment history

Your track record of making on-time payments significantly impacts your credit score. Late payments or defaults can have a detrimental effect on your score. It's essential to prioritise timely payments to maintain a positive payment history.

Credit utilisation

The amount of credit you're currently using compared to your total available credit limit plays a crucial role in determining your credit score. Aim to keep your credit utilisation ratio low to maintain a healthy score. Experts recommend keeping your credit utilisation below 30% to maximise your score.

Length of credit history

The length of time you've been using credit accounts for a portion of your credit score. A longer credit history demonstrates stability and responsible credit management. Avoid closing old accounts, as this can shorten your credit history and potentially lower your score.

Types of credit used

Having a diverse mix of credit accounts, such as credit cards, loans and mortgages, can positively impact your credit score. Lenders like to see that you can responsibly manage different types of credit.

New credit inquiries

Applying for multiple new credit accounts within a short period can signal financial distress and negatively affect your credit score. Limiting new credit inquiries can help maintain a positive score.

The impact of behaviour score

Your credit score can significantly impact your financial life. A high score opens doors to favourable interest rates, better loan terms and increased access to credit. Conversely, a low score can limit your borrowing options and result in higher interest rates, making it more challenging to achieve your financial goals.

Tips to improve your behaviour score

Enhancing your behaviour score requires proactive effort and strategic financial management. Here are some actionable tips to boost your score:

Pay bills on time

Consistently making on-time payments is one of the most effective ways to improve your credit score. Set up automatic payments or reminders to ensure you never miss a payment deadline. Consider using budgeting tools or apps to help you stay on track with your payments.

Reduce credit card balances

Lowering your credit card balances can improve your credit utilisation ratio, positively impacting your credit score. Aim to keep your balances well below your credit limits. Consider creating a repayment plan to pay off high-interest debt first or transferring balances to cards with lower interest rates.

Limit new credit applications

Avoid unnecessary credit inquiries by being selective about applying for new credit accounts. Each new application generates a hard inquiry on your credit report, which can lower your credit score temporarily. Before applying for credit, assess whether you truly need it and whether you're likely to be approved.

Monitor your credit report regularly

Stay vigilant by monitoring your credit report for errors or inaccuracies that could negatively impact your credit score. Report any discrepancies to the credit bureaus for correction. You're entitled to one free credit report from each of the major credit bureaus annually, so take advantage of this to stay informed about your credit standing.

Maintain a healthy credit mix

Having a diverse mix of credit accounts, such as credit cards, instalment loans and mortgages, demonstrates responsible credit management and can boost your credit score. However, don't open accounts just for the sake of diversifying your credit mix. Only open accounts you need and can manage responsibly.

Utilise credit wisely

Use credit responsibly by only borrowing what you can afford to repay. Avoid maxing out your credit cards and strive to keep your credit utilisation low. Consider paying more than the minimum payment each month to reduce your balances faster and save on interest charges.

Avoid closing old accounts

Closing old accounts can shorten your credit history and reduce the average age of your accounts, potentially lowering your credit score. Keep old accounts open, even if you're not actively using them. If you have a credit card with no annual fee and a long history of on-time payments, consider keeping it open to maintain a positive credit history.

Dispute errors on your credit report

Regularly review your credit report for inaccuracies, such as incorrect account balances or fraudulent activity. Dispute any errors you find to ensure they don't negatively impact your credit score. You can file a dispute online with the credit bureaus or send a letter via certified mail with supporting documentation.

Consider credit-building tools

If you're struggling to establish or rebuild your credit, consider alternative credit-building tools, such as secured credit cards or credit-builder loans. These products are designed to help individuals with limited or poor credit history improve their scores over time. Make sure to choose reputable lenders and products with reasonable terms and fees.

Seek professional advice

If you're unsure how to improve your credit score or manage your finances effectively, consider seeking advice from a financial advisor or credit counsellor. They can provide personalised guidance and strategies to help you achieve your goals. A financial professional can review your credit report, identify areas for improvement and develop a tailored plan to help you reach your desired score.

Common questions about behaviour scores

Can closing old accounts improve my behaviour score?

Closing old accounts can actually harm your behaviour score by reducing the average age of your credit accounts and potentially increasing your credit utilisation ratio. It's generally advisable to keep old accounts open, especially if they have a positive payment history and low balances.

How long does it take to see improvements in my behaviour score?

The timeline for seeing improvements in your behaviour score varies depending on the actions you take. Consistently practising positive financial habits, such as making on-time payments and reducing credit card balances, can lead to gradual score improvements over time. However, significant changes to your score may take several months or even years to occur.

Will checking my own credit report impact my behaviour score?

No, checking your own credit report through soft inquiries does not affect your behaviour score. It's considered a routine part of managing your financial health and is not factored into your score. You can check your credit report as often as you like without any impact on your score.

Can I improve my behaviour score quickly?

While it's possible to make significant improvements to your behaviour score over time, there are no quick fixes. Improving your score requires patience, discipline and consistent financial management. Focus on adopting positive habits and addressing any negative factors contributing to your score and you'll see gradual improvements over time.

Wrapping Up

Improving your behaviour score is a journey that requires diligence, discipline and strategic financial planning. By implementing the tips outlined in this article, you can take control of your financial future and unlock opportunities for greater financial stability and success.

Remember, receeve is here to support you on your business’s journey to financial wellness. Connect with us on social media: Facebook, LinkedIn, Twitter and YouTube, or request a demo to learn more about our debt collection platform and debt process automation solutions tailored for enterprise, alternative lenders, agencies and BNPL providers. With our AI-driven approach and innovative tools like the customer payment portal, case manager and real-time data and reports, you can navigate the world of debt collection with confidence and efficiency.