10 top tips to improve your credit score

We’ve all heard about a credit score but to many of us, we are unsure about what it really is and why it’s so important. Well, your credit score can affect more than just your mortgage, credit card applications and loans; if you have a poor credit score, it can actually affect your utility bills, home and car insurance, phone bills and even the APR you are charged when you are given a loan.

So what do companies use to check your credit score?

Different companies actually use slightly different measures so it’s important that you are aware of as many possibilities as you can be. Apart from the obvious application forms that you fill out, lenders will also access your information from the electoral roll, any court records (CCJs, IVAs, bankruptcies, other court debt orders), search, address and linked data and your account data (banks, utilities, mortgage and phone bills). So with all this data, your credit file is quite a substantial pocket of information on you.

Getting or keeping a great credit score however, might not be as easy as you think. If you’re looking for a loan and you’ve been paying off your debt in full each month, you might think you’re the perfect candidate – wrong! While that seems like the logical thing to do, it might not guarantee you a loan! Why? Because the lenders aren’t going to see much profit from you. So do your homework before you apply for any loan or mortgage and risk affecting your credit score any further.

Ideally you should aim to check your credit file. Your credit file is held at Experian, Equifax and Callcredit.

So here are 10 top tips for improving your credit score

1- Always check your credit reference files – Why is it so important to check?

Well to put it simply, there could be a really basic error on your file like an extra 0 or a missed 0 off your salary; these errors can have huge ramifications on your credit score. You also shouldn’t assume all three files are the same. If you can, you should check all three for errors before you start.

2- Ensure that you are on the electoral roll

It might seem odd but being on the electoral roll ensures your lender can check you are who you say you are!

3- Never ever miss a repayment on a debt

The simplest way to avoid this is to set up a direct debit for the minimum amount of the loan to ensure you don’t miss a payment. If you are struggling financially, call up the Loan Company, mortgage or lender and see if they can help.

4- Minimise the amount of credit applications you make

It might sound odd but the more applications you make in a short (6 month period), the more desperate you will look to lenders.

5- Check your address is up to date on all your loans, cards, registers

This is another simple thing that you can do to boost your credit score simply. If you have multiple cards etc in your name registered to different addresses, it can mess up your ID check and limit your lending options.

6- Always check your credit file after a rejection

Going back to what I mentioned in number one, it could be due to a simple error or something else that you need to address before applying for further loans.

7- Cancel unused credit and store cards

Even if you don’t use them, having too much available credit to your name can negatively impact your credit score.

8- Reduce your debt

If you have any savings at all, you should look at using them to reduce any debt you are currently in.

9- Pay for insurance up front

If you have the money, it’s far better to pay for insurances (home, car, mobile) in one upfront payment rather than spread it out across the year.

10- Don’t withdraw cash on credit cards

Finally, try not to withdraw cash on a credit card. Not only do the rates of interest that you pay make it incredibly expensive, but many lenders see this as evidence of poor money management skills and don’t look favourably on it.

So there you have 10 tips to help you improve your credit score. If you have any other tips, I’d love to hear them!

If you are looking to take out a loan but want to know how affordable it will be, cashlady.com have a Loan affordability Calculator as well as help and information on APR, lender guides and payday comparisons.

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