Your credit score is so important and is sometimes something that is over looked until you need it. Buying a house, getting a credit card and even a phone on a contract can be affected if your score isn’t very good. I didn’t know that you can get a bad credit rating through people that you are financially linked to until it was too late. Over the last few years I have been taking steps to improve my credit score as at some point in the future we would really like to own our own home. If you, like me, discover that your credit rating is less than perfect, don’t panic as there are things you can do to help improve it.
Stoneacre Financial Services have produced this handy infographic, The Road To Good Credit, to help you in starting to improve your credit rating.
Here are Stoneacre’s tips.
Check your credit report
First things first, check your credit rating. You can obtain a copy of your credit report from many online services, and under the Data Protection Act 1998 you can request a copy for just £2, avoiding the costly monthly payments some companies demand. Even if you discover that it is low, then at least you know and can start making steps to improve it.
Fix any problems
If you notice any innacuracies this could be affecting your overall score. You can then contact thecompanies and update your information.
Once you have made sure that everything on your file is correct, stay in the same house, and try to keep all of your details the same. A little tip is to get a landline phone number too as credit companies see this as a further connection to your property.
Register on the electoral roll
This is one of the most important things to do.
Apply for credit
Apply for a credit card, use it and pay it back in full. Even if it is a high interest, low amount card, if you use it and pay it back in full each month you are showing that you can be trusted with borrowed money.
Never use pay day loans
Although these can seem like a quick and easy solution, they aren’t. The high APR can quickly rack up huge repayments and put you in to further debt.
Never miss a payment
A default is registered on your account for 6 years and can have a serious impact on your score.
Sever any negative financial ties
Other people’s bad credit can affect yours, so make sure you are not financially tied to anyone who is harming yours. If you have a partner who is not very reliable with money, check and financially disassociate yourself from them. Do not open any joint accounts together.
Get a mortgage
If you can get one then this shows other lenders that you are trustworthy.
Getting married and linking with someone else who is a responsible borrower will in turn help your credit rating.
What do you need to do to reach a good credit score?
Disclaimer: This is a collaborative post.