I’m pretty sure there will be a lot of you guys who read my blog who have applied for credit at some point in your life, only to be turned down because you didn’t have a good enough credit score. I know it’s happened to me on several occasions, and it doesn’t feel very good at all when it happens. So for today’s post, I thought I’d share my top tips to help improve your credit score. I hope you find it useful!
01. Check your credit report
Before applying for any sort of credit, it’s always a good idea to check out your credit report. I recommend using Noddle for this, as they allow you to access your credit report free for life, whereas other companies, such as Experian, offer a free trial and then charge monthly for you to continue looking at it.
Once you’ve accessed your credit report, make sure that all the information on it is accurate. If not, you can contact the lender to get it removed. If you request your report on a free trial then find you don’t need to access it after the trial period ends, remember to cancel it by setting a reminder on your phone.
02. Disassociate yourself from your financial partner
Did you know that when you take out a joint bank account or mortgage with someone, you automatically become ‘linked’ to them financially? This means that if they have a bad credit rating, it could have an impact on yours too (and vice versa).
If you’ve split up with someone that you had any joint accounts with, or the joint financial product you have taken out is no longer between you both, make sure you inform the credit reference agencies of your disassociation. If you don’t, the other person’s financial dealings could still have a massive impact on your credit score. And you don’t want that to happen when you’re trying hard to improve it!
03. Get yourself on the Electoral Roll
Getting yourself on the Electoral Roll can significantly increase the chances of being accepted for credit. This is because prospective lenders and credit reference agencies use this to check you are who you say you are, and that you live where you say you live.
I have to be honest here and say that I didn’t update my details when we moved house 4 years ago, and I still managed to obtain credit for various things. But I’ve also been turned down for credit because I wasn’t on the Electoral Roll. It’s very much a case of swings and roundabouts with this one!
04. Close any unused credit cards, store cards and mobile phone contracts
Lenders often take into consideration how much credit you already have access too, as well as the amount of debt you owe. If you have any credit cards, store cards, or mobile phone contracts that you no longer use then it’s a good idea to close them.
To do this, you need to contact the provider and close the account. Simply cutting up the cards and forgetting all about them isn’t enough. Be prepared for the Spanish Inquisition when you ring up though! Lenders will keep asking why you’re wanting to close the accounts because they don’t want you to leave. Don’t let them talk you into staying with them if you really don’t need the accounts – stick to your guns and close them down!
05. Don’t miss or make late repayments
Believe it or not, missed or late repayments can stay on your credit file for up to six years. That’s a long time! However, if a late payment was made because of a circumstance that was out of your control, such as a direct debit not being set up on time, then it is possible to get the black mark removed (as long as you made the payment as soon as you noticed, of course). All you need to do is call up your provider and have a chat with them.
06. Make sure you’re paying off any debts you already have
If you already have debts in your name, make sure you’re paying them off. It’s good practice to pay off more than just the minimum payment each month too, as this shows prospective lenders that you’re managing your debts well, which will go a long way to increase your chances of being accepted for credit with them.
07. Build your credit history with a credit card or loan
If you’ve never had credit before, it can often be difficult for a lender to assess you. Why not consider taking out a credit building credit card? The idea is that you make a couple of small purchases on it each month, then repay the balance in full at the end of the month via direct debit. This will show that you can responsibly manage credit and build a good credit history.
If you’ve had credit in the past, but have damaged your score for whatever reason, then why not consider taking out a loan for bad credit? These are small, short term loans designed to help customers overcome unexpected financial emergencies and need to be paid back as soon as possible (usually on your next payday). These sorts of loans will go some way to helping rebuild a damaged credit score, as well as helping you out financially.
08. Take out a prepaid card to repair your credit
Another way to help improve your credit score is to take out a prepaid credit builder card. You’ll be charged a monthly fee of around £5 for a service like this, which you’ll need to keep paying for a 12 month period. At the end of the 12 months, they will add an entry to your credit file to say that you’ve successfully repaid a debt. The good thing about a prepaid credit builder card is that it doesn’t require a credit check as you don’t actually borrow on it. I did this last year and it was well worth the monthly fee to help repair my credit history.
09. Space out your credit applications
And last but not least, try not to apply for credit too often. Credit reference agencies don’t get told if you are rejected for credit, but a note is made every time a credit search is made by a lender, and the more credit searches carried out in a short space of time, the less likely you are to actually be accepted for credit.
Space out your credit applications and, if possible, try to find out whether you’re likely to be accepted before applying. My top tip here would be to only ever apply for credit if you really need it so as not to do any more damage to your credit score.
And there you have it, my top tips to help improve your credit score. I really hope it’s helped if you were feeling a little lost on how to start going about it. And good luck with getting that score up!