Different Ways to Improve Your Credit Score
Most people will have heard the term 'credit score', but many are unaware of what it is or why it's so important to have a good one. Put simply; your credit score is used by companies to see how financially stable you are before they decide to grant you a loan, a credit card, a mobile contract or a mortgage. The majority of businesses you deal with will share your payment history with credit reference agencies. When you apply for any credit product, for example, the lender will check with the credit reference agencies to see how good your payment history is to determine whether you are a risky borrower or not. If you have a history of missing payments, then this will result in a poor credit score which will put companies off lending to you. There are more and more options out there now, such as companies that let you lease a car with bad credit and ones that grant you loans as long as you have a guarantor. However, these are far and few between.
If you suffer from a bad credit score, then don't worry. There are many things in your control that will help you to improve it of which we are going to discuss during this short, but insightful article.
Check Your Credit Score Regularly
Its good practice to take a look at your credit score on a regular basis. Something as simple as having the wrong address on your score can have an adverse effect. Make sure you check all of the information and report anything that looks wrong.
Pay Your Bills on Time and In Full
This might sound like an obvious thing to include but paying your bills on time and in full is one of the best ways of proving to lenders that you are capable of managing your personal finances. If you can, pay your bills by direct debit, this will help you manage your finance better and prevent you from making payments late. If you don't have any history of loans or credit agreements, paying your bills on time, and in full is a way of building your credit score.
Don't Make Too Many Credit Applications
It's important not to make too many credit applications when you have a poor score because this can suggest that you are desperate for credit. Each time you apply for a new credit product, it leaves a footprint on your score which lenders can see.
Check if You A Linked To Somebody Else
Having a somebody else's credit score linked to your through a joint account could affect your personal score if they are poor at managing their finances. If you are financially connected to somebody else, their information might affect a lenders decision when you apply for a credit product. If you are no longer connected, then you need to get this changed as soon as you possibly can.
Register on The Electoral Roll
The electoral roll isn't just used for voting, but in other useful ways such as detecting crime and part of the information on your credit score. If you are on the electoral roll, it allows lenders to verify you are who you say you are and confirms where you are living. It means you are a less risky borrower because the information helps to rule out any possibility of fraud.
Pay Off Any Existing Debt
Ideally, you should pay off any existing debt before applying for a new credit product. Alarm bells might ring among lenders if you already have a lot of outstanding debt. If you have existing debt and want to apply for a credit product, then recommend creating a plan that will help you pay off the money in good time.
Remember That Stability is Key
Credit lenders welcome seeing long-term relationships in place as its evidence of good payment behaviour. Having a long-term relationship (and a good one) with your bank is a great way of building your credit score. In addition, lenders like to see evidence that you lived at one address for a long period of time.