15 smart ways to increase your credit score
The coronavirus pandemic has affected people’s personal finances over the past year, with unemployment rates reaching high levels.
Unfortunately, if people are having trouble making payments, it could impact credit scores for up to six years. This means that it can be more difficult to get accepted for mortgages and credits, including everything from car financing to cell phones.
15 smart ways to increase your credit score
However, all is not lost. Sarah Neate, editor-in-chief of Ocean Finance, has put together her top tips for those looking to improve their credit rating. Read on to find out a range of things you can do to improve your score quickly or for longer term solutions.
- Add your name to your household bills. Even if you are sharing a flat share, you should have your name on some household bills as this proves to credit reference agencies that you can make payments on time. This also applies to couples – don’t let one person pay the bills, even if the other person sends more than half of the payment.
- Register on the electoral roll. It is one of the easiest ways to improve your credit score. Credit lenders value stability and accountability, so showing that you’re on the voters list is a great way to show that off.
- Add a landline. Again, this simple tip shows lenders that you are stable.
- try kkeep a fixed address because credit lenders consider this stability and are more likely to favor future credit applications. 3 to 5 years is considered a good minimum time.
- Check your credit report for errors. Errors can happen even on your credit report, so it’s worth taking the time to review your credit report and make sure everything is correct. Having incorrect information on your file could potentially interfere with any credit application you make in the future, so it’s important to rectify these errors as soon as possible. You should look for the wrong addresses or names, including middle name, duplicate accounts, or accounts you don’t recognize. Additionally, you should look for closed accounts that are still marked as open. If you spot anything incorrect, contact the credit reference agency to rectify it.
- Don’t withdraw money from a credit card. While you might have a hard time finding cash, you should still try to refrain from withdrawing money from a credit card as it incurs high interest charges.
- When paying your credit card, pay more than the minimum (whether you can). Of course, the faster you pay off your balance, the less interest you will end up paying in the long term.
- If you have high interest debt that you are having trouble paying off, consider a debt consolation loan. Essentially, it is a loan that pays off your existing debt and could help you lower your monthly repayment each month. Naturally, this could also leave you with more disposable income for essentials such as bills and food.
- Use calendar reminders to stay on top of your finances. If you find it difficult to pay your bills on time, or if you are usually not very organized, consider putting your money for the bills in a separate bank account. You then need to set up calendar reminders on your phone, which notify you the working day before an invoice is taken, and you can then transfer the money to the account.
- Alternatively, you could set up automatic debits to make sure you never miss an invoice and your payments are always made on time. It shows lenders that you can pay your bills reliably and comfortably.
- Before applying for a loan, make sure you use a free eligibility checker because this “soft research” tool can find out the likelihood of you being approved, without affecting your credit score.
- Try to stay below 25% of your credit limit. So if you had a £ 1,000 credit limit, spending less £ 250 per month will keep you under 25% of your overall limit and make it easier to pay off your balance, while improving your score.
- Do not open a new credit account for six months. This is one of the easiest ways to increase your score because it doesn’t require you to do anything.
- If you are applying for credit, choose the right time because you may have a loan loan to expire on your report. For example, default accounts stay on your file for six years, so if they are about to expire, it might be worth the wait afterwards. Not only will this increase your chances of getting approved for credit, but you may also be able to get a better interest rate (according to the rest of your report).
- Think twice before agreeing to be financially bound to those with bad credit. It is also important to think about other people’s credit scores, if you plan to be tied to them. Before you get into any form of joint funding – whether it’s a bank account or a utility bill – you should have a conversation about their credit score to see where you stand. If they have a bad credit score, it could potentially impact yours and, therefore, any future credit checks.
However, the most important tip is to give your credit score time. While there are some quick wins you can make, these only help move you in the right direction. The only way to maintain a high credit rating is to have consistent good behavior.