3 Steps to Improve your Credit Score
1) Make sure your credit report is correct
The first step as it often should be is the simplest. Many of you will be tempted to skip this but making sure that your credit report is accurate should be the first thing you do.
If you do give in to temptation and skip this step, then following this next two will not do your credit score any good. The information on your report needs to be accurate and up to date and any inconsistencies or errors need to be rectified as soon as possible. If an error is having a negative impact on your report then the damage is done and the next 2 steps will not improve things until this has been rectified.
To get any errors corrected you should contact the company that has supplied the information. If this fails, then try contacting the credit agency themselves. They will either investigate the error for you or inform you of the process to get the information corrected.
To repeat, there is no point taking the following steps to improve your score if there is already false information on your report that you are unaware off!
2) Managing the credit you have
Perhaps the most obvious factor on your credit report is the credit you already have available or are currently using. Lenders will look at the amount of outstanding credit you have available, but they will also look at the amount of credit you are using. If you owe a small amount of money on a credit card but you are close to your limit this may well look worse then owing more money but being well within your credit limit. The rationale for this is that you may not be successfully managing the amount of credit you already have. Best practice is to stay under 50% of your credit limit.
Tip – you may be able to do this without actually making any extra repayments, unless you have a very poor credit score your lender will most likely agree to increase your credit limit, lowering the percentage of the credit used.
£1500 owed on a credit card with a limit of £2000 would mean you are using 75% of your available credit. Ask the lender to increase the card limit to £3000 and you are now only using a healthy 50% without making any extra payments. (Note, that you must not use this extra credit or your percentage will increase again making the whole exercise pointless).
You should also approach new credit with caution. Every application will leave a “footprint” on your profile and if you are refused credit you would be wise to avoid applying for anymore unless it is absolutely necessary. Multiple applications over a short period of time may indicate to lenders you are in financial difficulty. Comparison websites will usually let you know how likely you are to be accepted for credit so it is best to only apply for those above 85%.
3) Register to vote
By now I am sure you’ve had enough of hearing about credit and the nuances involved in maintaining a high credit score so this last point will be short and sweet…Register to vote!
That’s it. Lenders use the electoral roll to confirm your address and if you are not registered you will find it difficult to get any credit at all whether you intend to vote or not. In fact, this should probably have been point 1 because you can play around with your credit margins all you want, and it will most likely be all for nothing if you are not registered to vote.
Hopefully you can use these 3 steps to improve your chances of getting credit at a decent rate. 2 of the 3 are very easy to do and my aim was to give you 3 steps that could be completed in no more than an hour. Hopefully you found these tips useful and can use them to improve your credit score.