Everyone has a credit score and this score will dictate how likely you are to receive credit from banks, shops and other money lenders. The score is calculated using a variety of information, including details on the amount of credit you already have, recent applications and whether you repay on time. The idea behind the credit score is that it provides lenders with a rough idea of whether you’re a “good” candidate. After all, these organisations are taking a risk every time that they provide credit and therefore any metric that helps them to negate this risk is valuable.
Having a good credit score can be extremely important as it’s often a deciding factor in whether you can receive a loan, credit card or even a mortgage. Unfortunately, it can be easy for one poor decision or mistake to tank your rating and this can have a lasting effect. However, there are ways in which you can improve your credit score and therefore the likelihood that lenders will work wit you.
1. Join the Electoral Roll
One of the easiest and quickest ways of improving your credit score is to simply join the electoral register. Registering to vote allows credit agencies to verify your identity and therefore instantly improves your credit rating, adding a whopping 50 points to your score. Suffice to say, anyone looking to improve their score should join the electoral register, if they haven’t already as it’s a complete no-brainer.
2. Build
Often when we think about a poor credit score, we assume that is based on late payments or some other misstep. However, having no history of credit can be just as much of an issue, as lenders have no way of knowing how you deal with repayments. This can be particularly problematic for younger people or those who have recently entered the country. To combat this issue, you need to build up your credit rating slowly. You’ll often find that the only credit cards available to you are relatively poor, with high interest rates and low limits. However, this is your opportunity to showcase that you can make regular repayments, on time and in full. Even if you just use this card for a purchase and then repay this cost straight away.
3. Check Your Report
Considering just how important your credit report is to your overall score and therefore your ability to receive credit, it’s important to regularly check for mistakes or fraudulent activity. Surprisingly, even something as small as a spelling mistake or error with your personal details can have a negative effect on your credit score. Therefore, if you notice any mistakes on your credit report, it’s important to contact the provider as soon as possible and ask them to change it.
Fraudulent activity can be particularly worrying as fraudsters can use your personal information in order to take out a loan or credit card, without you even knowing. Therefore, they can cause substantial damage to your credit record and rating, with long lasting consequences for your future. If you see anything on your credit record that looks suspicious, don’t hesitate to contact your service provider for further help.
4. Avoid Too Much Credit
The nuances of the credit score can sometimes feel somewhat counter-intuitive but it’s important to approach with caution in order to protect your rating. For example, applying for lots of different types of credit, in a short amount of time, can have a negative effect on your rating. Particularly if you’re being rejected from multiple different lenders. Furthermore, it’s good to have larger credit limits but to utilise a relatively small portion of this limit. Basically, maxing out your credit can also have a negative effect on your record.
5. Pay on Time
It may seem like an obvious suggestion but one of the best ways you can improve your credit score is to simply repay what you owe, on time and in full. Having a long-term history of being a good borrower will mean that you are the ideal candidate for further credit. Even those who have seen their score decline can improve their prospects just by committing to regular payments. In fact, just six months of making bill payments, on time and in full, can have a noticeably positive effect on your credit record.
It’s never too late to improve your credit score. It may take some time and hard work, but considering just how important credit can be for your future, it’s always worth it.
Anyone looking for advice on improving their credit score or any other financial solutions, should look no further than the experts at Fund Flow.
