Your credit file is one of the most important documents when you're looking to buy your first home. Mortgage brokers will often look at this document to decide whether or not you are a good candidate for a mortgage. A high credit score means that you're a low-risk borrower, and this can save you money in the long run. This article will discuss 10 ways you can build your credit file and improve your credit score.

Check your credit file regularly

Checking your credit file on a regular basis is a good way to catch any errors or negative information that might be affecting your score. You can check your credit file for free through the major credit reporting agencies in Australia: Equifax, Experian and  Dun & Bradstreet.

Use a credit card responsibly

If you use a credit card responsibly, it can help improve your credit score. Try to keep your balance below 30% of your credit limit, and make sure you pay your bills on time. Also, avoid using your credit card for cash advances, as this can be costly and will damage your score.

Keep updated with your repayments

Missing a repayment or defaulting on a loan can have a negative impact on your credit score. Mortgage brokers will often check to see if you have been keeping up with your repayments before approving you for a loan. To avoid this, make sure you keep up to date with all of your repayments.

Pay off any debts that you have

If you have any outstanding debts, it's important to pay them off as soon as possible. This includes things like personal loans, credit cards and store cards. Not only will this improve your credit score, but it will also save you money in interest charges.

Get help if you're struggling with debt

If you're struggling to keep up with your repayments, there are a number of services that can help. These include financial counsellors, debt consolidation services and hardship programs. These services can help you get back on track and improve your credit score.

Avoid using payday lenders

Payday lenders often charge high fees and interest rates, which can damage your credit score. If you're struggling to make ends meet, other options are available that won't damage your score. These include low-interest loans from charities or community organisations or Centrelink advances.

Manage your utility bills responsibly

Your utility bills (gas, electricity, water) will usually be listed on your credit file. If you're struggling to pay them, it's important to contact your provider and arrange a payment plan. This will avoid any negative information being recorded on your file.

Choose the right kind of credit products

There are a number of different types of credit products available, and not all of them are good for your score. For example, using a buy now pay later service can damage your score, as can taking out a short-term loan with a high-interest rate. Mortgage brokers will often look at the type of credit products you have used in the past to decide whether or not you are a good candidate for a loan.

Limit the number of applications you make for credit

Every time you apply for credit, it will leave a mark on your file. This is known as an enquiry. Mortgage brokers will often look at the number of enquiries on your file when assessing your loan application. To avoid this, only apply for credit when you really need it.

Avoid using a guarantor

If you're having trouble getting approved for credit, you might be tempted to use a guarantor. However, this can damage both your score and the score of the person who acts as your guarantor. If possible, try to find another way to get the credit you need.

There are a number of things that you can do to build your credit file and improve your credit score.

Building your credit file and improving your credit score is important if you want to be able to access financial products such as loans. Mortgage brokers will often assess your credit file when considering your loan application, so it's important to make sure that it's in good shape. There are a number of things that you can do to improve your score, including using a credit card responsibly, paying off debts and avoiding payday lenders. By following these tips, you can improve your chances of being approved for a loan and get access to better rates and terms.