In the busy lives we lead, there are many things to learn, contemplate and concentrate on. Yet one thing that is an increasingly important part of our lives which is generally poorly understood is that of credit scores. In fact, recent research revealed that a quarter of Brits do not fully understand their credit rating, while 10 per cent have no idea how to improve them.
It’s a fairly alarming set of findings, given how vital credit ratings are, and the widespread effect they can have. Even if it’s not something you care to think about very much, the truth is that having a poor credit score can actually affect those who you live with, and their credit scores too.
Given that applying for things like mortgages, credit cards, and other forms of unsecured loans are an inevitability for most of us, it’s something to focus on, and really try and enhance. The good news is that it’s pretty easy and hassle-free to do – it’s just a case of ingraining some good habits. Here are six which should help to get your cause moving in the right direction…
Have lines of credit open – and use them.
One common misconception is that having debts and obligations is a bad thing. On the contrary, having no credit history at all is actually just as bad as having a poor one. The key is to take on obligations, and then pay them off. That means using things like credit cards, store cards, mobile phone contracts, buying things on finance – and paying then them off timeously.
Reduce credit card debt and overdrafts
If you have built up a nasty chunk of credit card debt or overdrafts, you will definitely want to focus all of your energies and available funds on clearing these as quick as you can. Simply making minimum repayments will not only leave you forking out plenty of interest, but also could send a message to would-be lenders that you are struggling to live within your means. And always, always, make your repayments on time.
Register on the electoral roll
Creditors don’t care about your political leanings. But being on the voters’ roll at your registered address is crucial to building a good credit score, as it demonstrates intransience on your part – which they like. So even if you don’t actually vote, for the purposes of your credit score it is well worth taking a few minutes to sign up.
Stay away from payday loans and gambling
Your credit file dates back six years, meaning any black marks can be around to haunt you for a long time. So being responsible, and adopting a sensible approach to finance becomes even more crucial. Even if things are very tight during a specific month, don’t fall foul to such things as payday loans, online gambling and other ills. They simply won’t serve you well in the long run.
Get hold of your file
These days, it is now absolutely free to get hold of your file – not only from the main credit reference agencies, but also sites like Noddle and Clearscore. Aside from providing you with a good indication of where you are at in terms of credit score, these can allow you the opportunity to browse through your history. Mistakes happen all the time, and if these are late or missed payments in there which you think are dubious, and could be counting against you, you can then take these up with the relevant authorities by filing a notice of correction.
Don’t be a scattergun
When the time comes for you to apply for credit, be sure to do so sensibly. Getting an online quote is usually harmless, as providers will typically conduct a ‘soft search’ for this when assessing you. However, each time you apply for a mortgage, a credit card, or some other form of loan, it will leave a footprint on your file. If these are many of these within a short period of time, it could suggest to lenders that you are desperate, or short of money. Instead, go about it slowly; one at a time, thus ensuring you do yourself no harm in the process, and acquire the loan you need, and at a rate you deserve.