The term ‘credit score’ usually evokes a range of emotions from people, ranging from worry to downright confusion. A recent report discovered that 29% of UK consumers have never checked their credit rating which could impact their ability to get a mortgage, car insurance, or credit card.
But why should I improve my credit score, I hear you ask? Having a flourishing credit score will allow you to obtain loans with lower interest rates, which means you will be able to pay smaller sums back at a time.
As well as traditional loans, mortgage providers will be more likely to consider your application when it comes to buying a house, without you having to compromise on an interest rate that could cripple your bank account.
If you discover that your score could be improved, there are several steps you can take to top it back up. With this in mind, Brean Horne, personal finance expert at comparison site NerdWallet, has compiled a list of methods to help you do this.
- Register to vote
Registering to vote is a quick and easy way to boost your credit score.
This is because being registered makes it easy for banks and mortgage lenders to check your address and personal details which, in turn, raises your credit score.
Registering can be done online, over the phone or via post, so don’t put it off any longer!
- Keep older bank accounts open
Successfully juggling several credit accounts over a long period of time can help to boost your credit score.
Credit reference agencies usually reward you for managing long-standing accounts because it demonstrates that you use credit wisely and pay off your debts on time.
This could allow you to be considered for loans with lower interest rates, as you have demonstrated you are responsible with your money.
- Think about getting a credit builder card
Credit builder cards were designed to allow people with a limited credit history or bad credit scores to improve over time. This may improve a borrower’s chances of getting a loan or mortgage in the future.
They usually have low spending limits and high-interest rates. Due to this, it’s important to keep up with your repayments to avoid causing any further credit score damage.
- Limit how much you move around
While this depends on your circumstances, remaining in the same property for a longer period of time will help to improve your credit score.
Staying in the same location makes it easier for credit reference agencies to verify your identity quickly.
For some lenders, having the same address for an extended period of time also suggests that you have more financial stability and may impact your chances of taking out credit such as a loan or mortgage.
- Pay back any borrowed money on time
Paying off your debts on time shows lenders that you are a reliable borrower who manages money well. Due to this, it’s important to keep up with your repayments in order to improve your credit rating.
If you think you may miss a repayment or can’t afford to pay off your debt, contact your lender as soon as possible. They may be able to renegotiate the terms of your credit agreement to help you get your finances back on track.
This may help limit any long-term damage to your credit score, as it avoids missing payments or defaulting on your debts altogether.