Here are some tips to improve your credit score and increase your financial options.
Paying your bills on time
Defaulting on your repayments has the biggest impact on your credit score, but the good thing is it is the easiest to fix.
Since comprehensive credit reporting was started, paying on time is going to be reflected on your report and this improves your score. Look at this as a grading system. Every time you miss a payment, like your phone bill or credit card, your score goes down. When you make your payments on time, your credit score improves.
Keep in mind that an overdue payment is going to be on your report for 5 years. If you find yourself struggling to make your payments on time, consider setting reminders when your payments are due. Another option is to set up direct debits. Visit loanza.co.uk/bad-credit-loan-uk if you need cash fast.
Applying for credit when you need it
If you have made many credit inquiries in the past couple of months, you need to stop because it hurts your credit score.
When you get a credit card in your mail from the bank, ask yourself whether you really need it.
When looking for credit, some people usually apply as part of their research. Those who do this think it is a process of elimination, but this is not the case. They send out many applications hoping that at least one is going to be approved.
When you apply for credit (credit card, car loan, or personal loan); the inquiries are saved on your credit report and it shaves points off your credit score. You will have a hard time improving your score if you make many inquiries in a short time.
When you make hard inquiries, it affects your credit score. It is going to affect your score because it doesn’t look good for lenders. You seem desperate for credit.
What can you do when in such a situation? You should apply for credit only when you need it. When you get the credit card in your mail, think twice and see if you really need it.
Researching before you apply
There are many websites you can visit when researching before you apply. You should take your time to see the products available and which is going to meet your needs. Research online and see the type of products you qualify for. You should not be in a hurry because you can end up hurting your credit score.
When you find the right product, read the fine print so you can determine if it is the right fit or not. If you want to apply for a ‘platinum’ card, then you need to be earning at least £65,000. Such cards usually come with the best perks, but you are going to pay high annual fees. This is why you need to research first before applying for a card. There is no need to get surprised later just because you did not read what you were signing up for.
Taking ownership of your credit profile
An active credit account is a good thing because it will help you improve your credit score. This means having credit commitments.
This doesn’t mean going out and taking out a personal loan or a bunch of credit cards – don’t do this because it will make things worse – it means taking ownership of your credit profile.
If there is a bill you are paying, make sure the account is in your name.
If you live with someone and you are splitting all the bills, then all accounts should not be in their name. This means you are building the credit profile of your partner and leaving yours.
This also applies to internet bundles, phone plans, mortgages, and credit cards. If you are the one paying the bill, make sure it is in your name.