We have all heard about our credit score but many of us don’t know what it means, how it affects us and how we can improve it. Your credit score is important because if you have a bad score you could be refused credit when you need it, this means you might be refused a mortgage, loan or even a mobile phone contract.
The good news is, there are ways you can improve your credit score and it’s easier than you think. Simply follow the 10 top tips to improve your credit score below and you should see an improvement in your score.
Make sure you’re on the electoral roll
If you’re not on the electoral roll you could find it extremely difficult to get any form of credit, this includes loans, credit cards and even things such as a mobile phone contract. Registering on the electoral roll lets lenders know you are who you say you are and that you live at your address.
Pay your bills on time
This goes without saying but it’s important to ensure your bills are always paid on time if you’re bills are late for any reason this could be marked on your credit file and lenders will see this and will be less likely to trust you. If you need to borrow money on a short-term basis to cover bills you could ask your bank for an overdraft, use your credit card or short term loan. It’s advisable to use these only on a short-term basis and not to rely on these constantly.
Check your credit file for errors
It doesn’t happen often but there can be instances where an error is made on your credit file, this can include things such as an incorrect address, incorrect dates etc. A mistake on your file can have a negative impact on your ability to get credit so it’s important to regularly check your credit file to make sure your details are correct and up to date. If you’re not sure how to check your credit file you can register with ClearScore for free where you can access your credit file.
Keep credit applications to a minimum
When applying for credit it’s important not to make too many applications in a short period of time because this can have a negative impact on your credit score. A good way to avoid this is to see if you are likely to be accepted for a card you are interested in before applying, this will leave a “soft search” which is only visible to you.
Build a history of good credit
Along with ensuring you pay your bills on time if you keep any bank accounts, credit cards and loans in good stead then this will help improve your score and show lenders you keep to your side of the bargain.
Close unused accounts
Creditors will take into consideration not only the amount of credit you own but the amount available to you. If you have a large amount of credit available that is unused they may look at this unfavourably and refuse your application so it’s worth considering closing any accounts you no longer need or use.
Check if you’re linked to someone else’s credit file
If your credit score is linked to a friend, family member or partner who has a bad credit score this can adversely affect your credit score.
Reduce your debts
It might be tempting to pay the minimum on your debts but if you can pay more off of your debts each month this will show your creditors that you can be trusted and shows you are managing your debts well which will be reflected in your credit score. If you’re struggling to reduce your debts and with the payments, it’s important to speak to someone such as StepChange who can offer you advice on managing your debts.
Consider taking out a prepaid or credit builder card
If you have a bad credit score you can still rebuild it over time by managing your debts and bills well. You could also consider getting a prepaid or credit builder card which can help you rebuild your credit score.
Check your credit file for fraudulent activity
As well as ensuring your credit file is free from errors, it’s important to check it regularly for any signs of fraudulent activity. If you notice a credit account which doesn’t belong to you or an application on your file which you haven’t made it’s important to contact the company you use to check your credit file so they can look into the matter.
If you follow the above steps you should see an improvement in your credit score which will help you when applying for credit. Having a good credit score is necessary for a lot of things, a mortgage, credit card and even a phone contract requires you to have a good score so keeping it in good stead is essential.
If you have any tips to improve your credit score I would love to hear them.
*This is a collaborative post