Having a good credit score is important, increasing your chances of being approved for credit at the best rates. It’s not just about it looking good on paper, as it can also contribute towards your credit card, small loans, and mortgage applications, providing you with greater financial stability. However, maintaining a good credit score comes with a lot of work, especially if you are close to your credit limit(s). Regardless of your circumstances, you should always aim to keep your credit score high. By doing so, you’ll be able to take advantage of better loan interest rates, mortgage and insurance options. With that in mind, the expert team here at QuidMarket have dug deep into the top tips on how to improve your credit score.
Make Payments On Time
The best way to improve your credit score is to ensure all your payments are made on time and in full each month. By doing so, you are essentially showcasing to lenders that you can manage your credit responsibly and that further credit requests, such as applying for a loan, will be handled in the same way. Even if you’re unable to pay back the full amount when requested on a credit card, it’s beneficial to pay off the maximum you can in one transaction compared to the minimum asked of you. That way, you’ll be able to pay back what you owe more quickly. You may still find no credit check loans, however, these may not be the best option for you and your situation and may not be FCA authorised.
Prove Your Address
Another way how to improve your credit score includes having the ability to demonstrate where you live through registering on the electoral roll. By registering on the electoral roll at your place of residence, you are confirming who you are. So, whilst being on it might not directly impact your credit score, it provides further proof to lenders of your name and address which can be beneficial to your application.
Top tip: Even though it’s not always possible, staying in one place can help with improving your credit score. By moving home a lot, you are showing less stability so, whilst it may not be because you are unable to pay your rent, for example, lenders will still consider moving house regularly a red flag.
Check For Errors
It’s not impossible for an error to appear on your report, so it’s important to double check yours as soon as you receive it. Sometimes the smallest of mistakes, such as a mistyped address or postcode, may negatively impact your credit score thus putting you in a poor position to apply for credit. If you are yet to look at your report, it’s worth checking it to make sure all the information is correct and up to date. If you do spot a mistake, be sure to reach out to get it updated as soon as possible.
Check For Fraudulent Activity
Fraudulent activity is nothing new but is something you still need to be aware of. With that in mind, it’s important to monitor your accounts for any suspicious activity taking place. Ensuring that your credit report looks accurate is the first step to detecting this type of activity, such as if you notice that a credit application has been submitted in your name but not by you.
Keep Your Accounts Open
Even though it can be tempting to close your old accounts once you have finished using them, it can be beneficial to keep them open for your credit score. Doing so will help prove your long credit history, showcasing your ability to effectively manage multiple accounts. Many scoring models will reward you for this, especially if only a small percentage of your credit limit has been used.
Maintain Low Credit Utilisation
Another way how to improve your credit score is by keeping your credit utilisation in mind, which refers to the percentage of credit limit used. For example, if you have a credit limit of £1,000 and you’ve taken £500, your credit utilisation is 50%. The lower it is, the better. As a result, your credit score will increase. Though there is no right or wrong, experts recommend keeping your credit utilisation below 30%.
Proactivity Build Your Credit History
Sometimes, having no or very little credit history can make it more difficult for agencies to assess you, meaning that you may be handed a lower score. This is particularly true for young individuals, as they are unlikely to have as many financial commitments compared to those who have a mortgage etc.
If you are looking to get credit for the first time, it can be beneficial to set up some direct debits on accounts as this will help to get your credit history underway, such as your mobile phone payment. Similarly, making sure your payments are made on time can help boost your score.
Cut Financial Ties
If you have a joint bank account or similar with someone with a poor credit score, it may also be impacting your own. With that in mind, it’s a good idea to cut any financial ties you have with someone struggling to payback their payments on time or have a high credit utilisation. If you had a good credit score prior, it can take as little as a month to get your score back up to where it should be.
Having a good credit score is key. In addition to increasing your chance of being approved for credit card increases and loans, you are also more likely to receive a more competitive interest rate. The New Year is an excellent opportunity to improve yours, putting you on a good path for a higher credit score to help you get what you need with little to no additional efforts needed otherwise. Similarly, if you have just opened a bank account, be sure all your payments are made on time and a few initial direct debits are set up in your name to get you off to a good start.
Here at QuidMarket, we can look to help those looking for bad credit loans with our alternative short term options. We don’t provide debt consolidation loans, but if you are in a short term financial position and have no other ways to settle an unexpected or emergency bill, we may be able to help you. Find out more information on our site today, and for more financial help, please visit Money Helper.