Having a good credit score can make a big difference to your life, such as helping you qualify for a credit card or being approved for a loan or mortgage. Your credit score can be the key that unlocks countless opportunities, so what do you need to do to make sure yours is as good as it can possibly be?
Be punctual with your repayments
It’s vital that you meet any repayment deadlines in order to build or maintain your credit score. Maybe set up direct debits or reminders on your phone or calendar to make sure that you are on top of them each month.
Be responsible with your borrowing
If you borrow money and pay it back on time, that signals to lenders that you’re a good credit risk and able to make repayments. That can, in turn, give them confidence to offer you more money, perhaps for a mortgage or credit card. So make sure you don’t go overboard with your spending, or you might struggle to pay everything back.
Stay well below your credit limit
If your credit card balance is hovering around the high end of your credit limit, that might suggest to lenders that you are not in a financially stable position, and therefore affects your credit score. Whilst borrowing money is a good way to build up a credit rating and tell lenders that you are a good risk, you must remember to stay well below your credit limit. Less is more when it comes to building a strong credit score, and most lenders tend to expect you to remain under half of your credit limit.
Diversify your credit mix
You can boost your credit score if you have different types of credit, such as mortgages, loans and credit cards. But it is important not to have too many accounts in place, as lenders may look negatively on you taking on too much debt.
Register to vote
Being on the electoral roll can improve your credit score, as lenders will be able to confirm your name and address.
Don’t expect instant results
Building up your credit score takes lots of time and effort and cannot be rushed. So be responsible with your finances in order to increase your rating gradually.
Check your credit card report
Contact credit reference agencies to find out your score and review the information they have used to calculate it. Check these carefully, as they might contain some errors and discrepancies, from missing payment details to a typo, in which case you can raise them and make sure they’re corrected.
Talk to creditors if you are struggling
If you are struggling with any repayments, honesty is the best policy, so speak to your credit card company as soon as you can. Your creditor might even be willing to help you put together a repayment plan that reflects your circumstances.
