How to improve your credit score in 5 easy steps

by Evan on August 8, 2016 · 1 comment

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Your credit score is important, and you’ll want to protect it as best you can. With a decent credit score, you can apply for a mortgage, loan, credit card or bank account with relative ease. If a bank or lender sees a poor credit score on your file, this could affect your ability to obtain that product.

Money Saving Expert says that your credit score is more important than you might think, “Since the credit crunch started, way back in 2007, the importance of credit scoring to our financial lives has grown rapidly.”

Tip 1 – Register to Vote

If you’re not on the electoral roll, it’s unlikely you’ll get credit at all, so sign up immediately. If you aren’t eligible to vote in the UK, you could consider sending credit reference agencies proof of residency (utility bills, a UK driving licence, etc) and ask them to add a note to verify this. This should help you get credit.

Tip 2 – Meet all repayments on current loans and show how trustworthy you can be

Any forgotten or late payment gets makes a mark on your credit file. So if you have any loans to repay, make sure you meet repayments on time.

Wonga South Africa recently released a blog post about credit files and they say that many people don’t know the importance of improving your credit history, or even what a credit file is, and so fail to improve much on a ‘poor’ rating. Essentially, credit scoring is about trying to predict your future behaviour based on your past history. So, if you’ve had a payday loan from Wonga and failed to repay it, why would a future loan company trust you to repay another loan?

You need to amend your current spending and repayment habits and after about a year, your credit file should show a dramatic difference. Yes, it requires patience, but it is definitely achievable.

Tip 3 – Cancel unused credit and store cards

Money Saving Expert says, “If you have a range of unused credit cards and lots of available credit, it could be a good idea to cancel some of them. This lowers your available credit and should help.”

BUT, long-standing bank accounts with good credit histories can be a benefit to your credit score, so try leaving them open.

Tip 4 – Pay for insurance up front and not monthly

Monthly insurance payments can have an impact on your credit score. So, if you can pay it all in one go, try and do so.

Tip 5 – Keep personal details the same between applications

If you different job titles or phone numbers/addresses, try to use the same one on every form. It is important to be consistent. If you use different details, you might be flagged up by fraud scoring. Simply keeping some consistency can improve your credit score.

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