When it comes to borrowing and the things that help qualify your application, your credit history and rating are essential factors you cannot overlook. Your credit score governs your financial health, informing lenders of how well you manage your credit. Below are nine tips on how you can better your score.
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Limit Credit Applications
Requesting a credit extension within a short period makes lenders think you do not know how to manage your money and are overly reliant on credit. As such, they will consider you a high risk. Each application is recorded as a hard search on your credit report, and this is information that creditors and lenders can see. Therefore, consider spacing your credit applications out, limiting them to one within three months. Nevertheless, keep in mind that the approval criteria will differ from one lender to the next.
Be Prompt With Payments Consistently
Strive to settle your loans on time and in full. It is an effective way of showing creditors or lenders you are a reliable borrow. It also proves you can manage your credit responsibly. Often, an old and prudently managed account will play a significant role in improving the credit rating. Nevertheless, it would be best if you read about the pitfalls of unused credit cards.
Only Borrow What You Can Afford
Having debt troubles can result in you facing stiff rulings from IVA (Individual Voluntary Agreements), CCJ (County Court Judgements), or becoming bankrupt. Such issues will put a strain on your credit history that is hard to blot out six years down the line, thus hurting your credit score.
Build Your Credit History
Little or no credit history makes it harder for lenders to assess your eligibility for borrowing loans, which will lower your credit score. It is one of the hurdles that young people and those new in the country must surmount. Fortunately, it is possible to build up your credit history therein, improving your credit score. For example take out car finance – bad credit and ensure that you make payments on time to build your credit history.
Stick To A Low Credit Utilization
The amount of percentage of your credit limit that you use is what’s called credit utilization. For instance, if your limit is set at £3,500 and you have spent £1,750 of it, you have a 50% credit utilization. Most creditors and lenders tend to have a positive view of a lower percentage, which can help improve your score. Try to keep your credit utilization to less than 25%, if possible.
Prove Your Current Location
Use your current address when registering or update your details on the electoral roll. It would help if you did this whether you stay with your parents or in shared accommodation.
Avoid Delinquent And Defaulted Accounts
Late payments can result in your account becoming delinquent. Conversely, you risk having defaulted accounts if you sour your relationship with your creditors, which often occur when you have several missed payments. Both are issues that will dent your credit rating.
Try To Get An Instant Score Boost
You can prove to the lender that you can manage your money well by linking your current account to an Experian account securely. The lenders will search for instances that denote your responsible financial behavior, like putting money in investments or savings account or paying your council Tax or Netflix on time.
Watch Out For Fraudsters
When searching for reputable lenders, always look out for fraudulent activity signs as you closely monitor your credit report. If what you owe seems not to reduce, or you are being followed because of applications you never made, then you could be a fraud victim. If you are an unfortunate culprit of fraudulency, your lender should be liable for the damage to your score and fix this quickly.
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