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Highlights
Credit score is a numeric summary of your credit records.
Maintaining a good credit score can help you in getting loans, mortgage, or credit cards at better terms and lower interest rates.
- High credit score proves that an individual has shown responsible credit behaviour in the past.
The credit score is a numeric summary of your credit records and maintaining a good credit score can help you in getting loans, mortgage, or credit cards at better terms and lower interest rates. A high credit score proves that you have shown responsible credit conduct in the past and not defaulted on payments, which makes banks, lenders more confident while giving loans and mortgages. There are many ways to boost your credit score, but no way can raise your credit score faster and effectively than using credit cards relevantly and paying your bills on time.
© 2022 Kalkine Media®
Your credit score may fluctuate, depending on how often you use credit cards and take loans & mortgage, how reliable you are at repaying debt on time, and how you deal with your debts.
Also Read: How credit card rates have changed over the years
Let us now look at some ways that can help you to boost your credit score.
1. Don’t miss repayments
Always try to make full repayment on time each month as it shows lenders and creditors that you manage your debt responsibly. In case, sometimes you find it hard to pay your debt inform your lender as soon as possible and seek help. If you miss or pay any payment late, it will show up on your report that would affect your credit score.
2. Check your credit report and correct mistakes
Check your credit report every month to make sure there is no mistake, mistyping and all the information is up to date as any mistake can affect your credit score. You may check this information from three main credit reference agencies, Equifax, TransUnion, and Experian.
If you find any mistake, contact your provider or credit reference agency as soon as possible. In case any information is affecting your score but occurred during special conditions such as unemployment or hospitalization you can add a notice of correction to your file explaining your situation to the credit agency.
3. Register on electoral roll
If you have not registered on the electoral roll, go to the gov.uk website and register yourself as it is used by lenders to confirm your name, address, and where you have lived before. If you are not registered, you may find it difficult to get credit.
4. Avoid multiple applications
If your application for a credit card or loan has been rejected don’t apply for another one in a short period as it gets recorded on your credit report and can create a negative impact on your scores as it shows that you’re in financial difficulty.
According to Experian, in such situation you shouldn’t open an account for six months as that can boost your credit score by 50 points.
Also Read: How ‘Buy Now Pay Later’ schemes can create serious debt issues
5. Take low credits
Lenders and creditors investigate your outstanding balances and your credit utilization, which is the percentage you use of your credit limit while providing you loan.
For example, if you borrow over 90% of the limit on your credit card you may lose 50 points from your credit score. Keeping it below 30% of the limit will boost 90 points, according to Experian.
Also try to make more than the minimum payments on your credit card as it shows lenders that you’re not struggling to clear your debts and help you clear debt faster.
© 2022 Kalkine Media®
6. Build your credit history
The most common problem for young people is that they have little or no credit history that makes it difficult for lenders to decide whether to offer credit or not. If you have a poor or no credit score, start taking smaller credit that you can repay easily on time, as it may help you to borrow larger amounts in the future.
7. End financial relationships with ex-partners
Opening a joint current account with another person who is having a bad credit score can affect your credit score. As lenders may look at the credit report of both the account holders, when assessing your application. So, their bad credit report can affect your ability to get credit, even if you are applying it.
8. Don’t use your credit card for withdrawing cash
Never use your credit card for withdrawing cash from it as it gets recorded on your credit report, affecting your credit score and it questions if you can live within your means or even pay the money back.
Also Read: Is UK pension system flawed?
