Your credit score plays an important role in your financial life because it’s what a lender would use to determine if they get repaid on time when they decide to grant you a loan or credit card. The higher your credit rating,the more likely you will be approved for loans and credit cards on favourable terms – that may save you money in the process. Improving your credit score has many benefits. It may take time,but the sooner you address the issue,the better for your financial life. Here are 8 ways to help improve your credit.
1. Register On The Electoral Roll
Registering on the electoral roll at your current address adds an extra layer of assurance to your credit history. it will show on your credit file and help you get approved for credit. It’s an official proof of your name and address. If you are not eligible to vote in the United Kingdom,you should send copies of your UK driving license or a utility bill as proof of your residency.
2. Pay Your Bills On Time
Lenders will check how you pay your bills when they review your credit report. They will be interested to know how reliably you pay your bills. Past payment performance is a good predictor of future performances. That’s why you need to pay your bills on time every month. This will have a positive effect on your credit score. Paying late or not paying the due amount in full can negatively affect your credit score over time. This applies to all bills including credit cards,loans,mortgages,phone bills,rent payments,and other utility bills.
3. The Effect Of Financial Linking
You should be aware that anyone who shares a joint account with you is likely to be linked up with your credit file – whether it’s a credit card,utility bill or bank account. If the other party has a negative credit score,it can lower your credit rating too. On the flip side,if the other party has a good credit score,it can boost your credit score too.
4. Don’t Apply For More Than One Thing At A Time
A lot of loan applications within a short period of time isn’t going to serve you well. A lender will see it as desperation. While it might seem prudent to apply to different lenders to up your chances of getting approved for the loan,it can be harmful to your credit score. You should also avoid having too many credit avenues opened at once. Money Trumpet who offer a bad credit solution advise its recommended to check your credit file before deciding which lender to apply with.
5. Pay Off Debt And Maintain Low Balances On Your Credit Cards
Your credit utilisation ratio plays an important part in your credit score calculation. Your credit utilisation ratio is revealed by adding all the credit card balances at a given moment and dividing the figure by your total credit limit. People with good credit scores have low credit utilisation ratios. This means you are managing your credit cards well. To positively influence your credit utilisation ratio,you should pay off debt on time and keep your credit card balances low.
6. Don’t Close Unused Credit Cards
Closing an unused credit card may increase your credit utilisation ratio. Keeping unused credit cards open is a smart strategy to improve your credit score depending on the annual fees of the specific card.
7. Avoid Payday Loans
Payday loans have a bad reputation in the credit industry. Simply having a payday loan on your credit file may get your mortgage application turned down by a lender. A payday loan on your file suggests poor money management. That’s why you need to avoid payday loans if you want to improve your credit score.
8. Report Any Issue To The Credit Agency
If you see any error on your credit file,you should contact the relevant credit agency directly. Too many errors on your file can negatively affect your credit score over time. These are important factors to consider if you want to improve your credit score within a short time frame.
Your credit score plays an important part in your creditworthiness. The aforementioned article provides important information on 8 effective ways to help improve your credit score.