10 tips on how to improve your credit score
Your credit score not only determines whether or not you’ll be able to get credit, it can also have an impact on the interest rates you’ll be charged. If you haven’t checked your own credit score, then it might be a good idea to do so, because there are many things you could be doing without realizing it could negatively affect you. If you want to improve your credit score, there are a few simple steps you can take. Here are ten ways you can improve your credit rating.
1. Find out what is already registered against your name
It is really worth the few pounds it will cost to check your credit score. Credit reference agencies make mistakes, and lenders don’t always provide them with correct information. If you register online with a credit reference agency, it will see what is recorded against your name and then correct any errors.
2. Register on the electoral roll
Even if you do not intend to vote in the upcoming elections, it is still a good idea to register on the electoral roll. Failing to do so will have a detrimental effect on your credit rating and some lenders will not lend to you if they cannot find all your details.
3. Close old credit card accounts
If you’re one of those people who regularly transfer credit card balances to take advantage of introductory offers, don’t forget to close old accounts. If you don’t, you could have thousands of pounds of unused credit in your name and this could reduce your chances of getting more credit.
4. Always meet your mortgage payments
If money is tight, always pay your mortgage payments first and then find out what else you can afford. A late mortgage payment takes a big toll on your credit rating, so if you’re having trouble, talk to your mortgage lender and see if they can arrange reduced payments or a suspension of payments.
5. Be careful when making loan applications
If you’re looking for a loan, be careful not to do too much research with too many potential lenders. If you apply for a loan, or even just inquire about a loan, the lender may run a credit check on you, which lowers your credit score.
6. Remember to get your ex out of all your finances
A divorce does not prevent you from being responsible for any joint accounts that remain open, so make sure that all joint accounts and financial arrangements are closed or transferred to one name. This is a common mistake that people make and then find out that their own credit score has been damaged by something their ex-partner has done.
7. Always pay your bills on time when you can
Many of your regular bills are classified as credit, and late payment of these bills could affect your credit score. Utilities, such as electricity and gas, are particularly important, because utility companies are notoriously quick to turn over unpaid bills to debt collection agencies, and that will impact your credit score.
8. Build a credit history for yourself
There have been cases of very wealthy people being denied credit simply because they had never borrowed money before. Lenders view properly used credit as a good sign, so even if it’s not necessary, use your credit cards and then pay off the balance at the end of each month, so you have some sort of credit history to your name.
9. Reduce your utilization rate
30% of your total credit score is based on how much you owe in total, so one of the easiest ways to get better credit is to pay off some of your debt. If you know you’ll be applying for a loan or other form of credit, it might be worth paying even the smallest debts, like store cards, up to date.
10. Carefully review your credit report
Some lenders can be very slow to notify the credit bureaus when the debt has been paid, and sometimes mistakes are made. Review your credit report very carefully to make sure it is accurate. You should also be aware of credit fraud, which can occur if someone has used your information to obtain credit for themselves.