There are several ways to improve your credit score because it can constantly go up or down based on your financial circumstances.
There are several advantages to having a good credit score because it vastly improves your chances of being approved for financial products. In particular, those applying for a mortgage need to have a good credit score to prove that they are able to make repayments on time. Those with better credit ratings usually have access to the best rates of interest because lenders consider them less likely to default on repayment. In addition, individuals that have a bad credit history have the opportunity to change their circumstances and can use the methods below to rebuild their credit rating. The best ways to boost your credit score are explained below:
Join the electoral roll
Joining the electoral roll is the simplest way to improve your credit score fast. By registering yourself to vote, you have to confirm your name, date of birth and address with the local authorities. This information will be visible on a standard credit check run by a credit card or loan provider. So for a lender deciding whether to grant you a loan, they feel more confident knowing that your identity and address has been officially confirmed. You can join the electoral roll here.
Pay loans and cards on time
Paying loans and cards on time is essential to improve your credit score. By repaying on time, it shows that you are a trustworthy person to lend to. If your credit score is already high, paying on time will allow you to maintain a high credit score. If your credit score is low or in the middle, every payment you make on a time will contribute to increasing your credit score. This is because whenever a payment is made to the provider, the information is sent to one of the three main credit reference agencies Experian, Equifax and CallCredit and updates your credit score.
By comparison, failing to repay credit on time will also be reported back to the credit reference agencies and this will worsen your credit score. So it is important to pay on time to keep your credit score in tact.
Avoid making too many applications
You credit score can fall if you make too many loan or card applications within a short space of time. This is because several applications make the individual look desperate for money and suggests financial difficulty. For this reason, some lenders will avoid lending to people who have too many applications on their credit file.
Build up some credit history
Sometimes having no credit history can work against you when applying for financial products. This is particularly the case of young people who may never have had a credit card or loan before. If you have no credit history, lenders cannot tell whether you are a good person to lend to or not. Therefore, to help your credit score, it can be good to apply for a credit card with a small credit limit and get used to making regular payments on time to show lenders that you are good borrower. When applying for a mortgage, lenders like to see a history of transactions to get a better idea of your creditworthiness.
Rebuild your credit
There are specific financial products that can help you rebuild your credit score. Guarantor loans are available to those with poor credit provided that you have a guarantor with a better credit rating. The idea is that the guarantor helps you get the loan because of their good credit and they agree to cover the cost of the loan if you cannot repay. However, a guarantor loan gives you the opportunity to prove your creditworthiness and since every repayment made on time is updated on your account, you are able to improve your credit rating.
Similarly, one can apply for credit building credit cards that are designed specifically to help you better your credit score if you pay on time. This type of product can help because if you pay your card on time, you won’t have to pay any interest and you may get an introductory bonus such as nectar points. A card may be more suitable to build your credit rating compared to a loan where you will have to pay interest to rebuild your credit score.
Check your credit score
To know whether you are actually improving your credit score, it is essential to know what your credit score is in the first place and to check it regularly. This will allow you to test the methods above and how effective they are in improving your score. Quiddi Compare works with a number of credit checking companies with some offering free trials for up to 30 days. You can follow this link to check your credit score.