4 easy ways to improve your credit score
When it comes to the world of loans – be that secured or unsecured – there is one inconvenient truth that holds sway… Your credit score matters. It’s that intangible, beast of a seemingly arbitrary number which dictates how expensive it will be to get a mortgage, or perhaps take out a loan to buy a car, or even to make home improvements.
Yet while it may feel beyond your control, given that it is left to the lender to interpret your credit file, the truth is that the power is in your hands to push your credit rating through the roof. And the good news is that the steps required to do so are not all that exhaustive either. Here are 4 easy things you can do to get your house in order:
1) Get rid of outstanding credit card debt and overdrafts
If you chug along at more than 75% of your credit card and/or overdraft limit, you’ll invariably be considered a greater risk to a lender. Prioritise reducing these balances as soon as you can. Perhaps this can be done by having a re-think of your monthly budget, or it could also be worth considering debt consolidation loans if you feel that these will help you to repay your debts in a more structured way. The idea here is simple: Acquire a loan to cover the capital balance of all your high-interest debt, leaving you with just a solitary loan to pay off each month at (hopefully!) a better APR.
Of course, getting a better APR on your debt consolidation loan will depend on your existing credit score, but it’s worth looking into. Either way, it’s in your interest to prioritise paying off credit cards and overdrafts, as the interest costs alone will significantly eat into your monthly disposable income.
2) Put yourself on the map
Here’s a nice easy one for you… Did you know that simply being on the electoral roll will help your cause? It doesn’t even matter if you exercise your right to vote or not. Just make sure you are registered – it only takes a couple of minutes to do so.
It is also advisable to stay in a permanent address for as long as you can. Those who chop and change residences, and generally display behaviour of a more transient nature will be viewed as less favourable for lenders, who put great emphasis on you being consistently traceable to a permanent address.
3) Do things right
It’s actually really easy to become a model customer for creditors. Here are some simple pieces of advice to ensure that you fit the bill:
- Don’t use payday lenders
- Take out multiple lines of credit (Remember, no credit history at all will hurt you too, so try to make sure you have things like a credit card, mobile phone contract and any other obligation which demonstrates that you are capable of paying off debt)
- Don’t overspend just before applying for a loan (Your credit history looks at the last six years, but your recent activity will carry the most weight)
4) Get your hands on your credit file
Your credit file isn’t some inaccessible document, locked away for only others to see. A statutory report is actually available for as little as £2 from any of the three leading credit experts CallCredit, Experian and Equifax, and can be applied for online.
Once you have this, be sure to have a read through. You’ll quickly be able to learn where you’ve gone wrong and where you can improve. But, most importantly, you must check to ensure that any recorded missed or late payments are accurate. If there is anything in there which you feel is incorrect, you can contact the credit reference agency and file a ‘notice of correction’, thus ensuring that your side of the story is heard.
Despite the exhaustive maths which goes into it, credit ratings aren’t actually all that difficult to get the measure of, and, most importantly, getting them to the optimal level is a piece of cake. But while the above steps may seem quick and easy, it is imperative that they are done, and done properly. Debt is something precious few of us will have the privilege of dodging in our lifetimes, so when the time comes to turn to a lender, make sure your credit score puts a smile on their face, so that you get a loan when you want it, and at a rate you deserve.