Not having a good credit score can be problematic if you want to get hold of a loan at a favourable rate of interest; credit scores are primarily worked out via your past credit history, and how much you’ve borrowed and repaid in the past. Debts that haven’t been cleared, and issues with your employment or address history can all negatively impact on your credit score. In this way, it’s worth thinking about some ways in which you can try to ensure you get a good credit score.
Regularly Check Your Score
It’s possible to ask for a copy of your credit report from the UK’s three main credit agencies – Equifax, Callcredit, and Experian – this can usually be achieved for a small fee. Looking over your report can allow you to fix any inconsistencies or mistakes that might be affecting your credit score.
Pay Off Your Credit Cards
If you can, pay off as much or all of the balance of your credit cards every month to avoid incurring charges; similarly, try not to exceed your credit limit, and take advantage of 0 % balance transfers to get better rates.
Avoid Unnecessary Loans
Don’t apply for lots of different credit at the same time, as this will show up on your credit record; similarly, pick the right loans with bad credit depending on the credibility of the company- the compounded interest charges on these loans can be very high.
Find a Guarantor
If you have bad credit, try to get a loan with a guarantor – this is a third party that assumes responsibility for repayments if you can’t make them, and is able to help you to boost your credit score by ensuring consistent loan repayments.
Don’t Make Multiple Credit Card Applications
It’s important to avoid making lots of credit card applications over a short period of time, as this can end up with a lot of rejection, and repeated, and costly checks on your record.
Avoid Joint Financing with Another Person
A joint financing approach can be a problem if you have a good credit score and they do not – bad credit by association can end up dragging both your scores down, even if you have been able to make consistent repayments elsewhere.
Get the Details Right
Make sure you update your details with credit agencies and lenders; this includes a fixed land line on top of a mobile, and updates to your employment history and living situation; being with the same bank for an extended period of time is also recommended to show that you’re in a stable position to borrow.
Get on the Electoral Roll
Another way to demonstrate your stability and ability to borrow is to get on the electoral roll; doing so will help to convince lenders that they aren’t encountering fraud, and will give you more ties to your local area.
Cancel Old Credit Cards
Any out of date credit cards should be cancelled, as they will appear on your file, even if you no longer pay into them. Check to see whether there are any outstanding cards on your record by requesting it from credit agencies.
Clear Off Any Old Debts
These debts might include anything from county court judgements to defaults on personal loans or car payments; make sure that everything is paid off that can be to avoid taking a hit on your file.