How To Get Credit Savvy

Dump your credit card

"Consider a debit card," says Susan Jackson, executive director of the Women's Financial Network. "It's a good solution when you are paying off existing debt or when you take on a mortgage and need to be super-conscious with spending." If you do need a credit card, Alex Wilson, founder of SavingsGuide.com.au, advises avoiding multiple cards and sticking to a low-interest account that you pay off every month. "It shows commitment to your bank and, more importantly, that you have adequate cash flow to service a loan," he says.

Do a finance health check

Find out how credit-worthy you are by requesting a free copy of your credit rating at www.mycreditfile.com.au. Then start to improve it by arranging to pay outstanding bills. "Take advantage of an introductory credit card balance transfer at zero per cent and give yourself a six-month buffer to get your debt down," recommends Wilson. "With less debt, you're less of a risk to banks and your borrowing power goes up." Visit www.moneyhound.com.au for cards offering zero per cent on transfers and purchases.

How To Make The Most Of Your Money

Bolster the bottom line

Understand what a lender looks at, and be ready for their scrutiny. "Banks will want to see that you can manage credit cards, pay bills on time, and have savings," says Jackson. Greg McAweeney, executive general manager of RaboDirect Australia and New Zealand, says it's simple – just spend less than you earn: "Set goals, like saving a certain amount each month, and work out a plan to achieve it." The website www.moneysmart.com.au is a good starting point, but for more tailored advice, contact a certified financial planner through the Financial Planning Association of Australia. Visit www.fpa.asn.au.

Strategise your spending

Keep a spending diary to see where your money is going. "If you overspend at the supermarket, cut back on luxuries, or pick cheaper generic brands," advises Jackson. "Getting credit-ready usually means tidying up your financial act all-round, and that's where a spending diary and other tools can keep you on track." Find other savings strategies at www.msmoney.com.au or download a budgeting app, such as myExpenses, XpenseIt or PocketMoney.

Have a specific goal

Know what you're aiming for. For a shorter-term goal, such as a car or holiday, a high-interest cash savings account can be the best option. For first-home buyers, Wilson recommends a government-supported First Home Saver account. "They have lower interest and tax, and help you focus on a property," he says. "On top of the usual high-interest accounts, I strongly suggest putting clumps of money into a term deposit, which locks the cash away."

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