BLOG: Five tips to boost your credit score
Three in 10 people never look at their credit score and a quarter are unaware of the factors that contribute to the score, according to research commissioned by Experian last year.
If you have a poor record of paying back your debts, it’s more likely that you’ll have difficulties getting your loan application accepted or end up paying a higher interest rate on the amount of money you borrow. As such, it’s extremely important to keep a track of both your credit score and history.
If you’ve never, or rarely, checked your credit report, it’s a good idea to do so even if you’re not hoping to borrow money soon. It can take some time to improve your overall score, so acting now can provide you with more opportunities in the future.
With that in mind, here are top five tips on how you can boost your credit scores and continue to maintain your credit history:
Pay all your debts on time
That goes for all your bills, not just your credit cards and loans. Even a small fine could wind up on your credit report if it’s left unpaid. Continue to pay all your bills on time to keep your debts low and maintain a good credit score and history.
For those fortune enough to own investment properties, when tenants move out and the property is void, make sure you notify utilities suppliers and the council. Otherwise, these could be recorded as missed payments and the suppliers may not even have your home address to notify you.
Be on the electoral roll
Lenders like to see signs of stability in your credit report because it suggests you’re in a better position to pay back debt, so if you’re on the electoral roll, it allows lenders to easily verify your personal details. This also means you’re a less risky borrower because this information helps to rule out the possibility of fraud.
Having an active credit history
Not having any active credit accounts can also have a negative impact on your credit score. The reason for this is that lenders have no proof about your ability to borrow money and repay it reliably, and so you may be seen as a greater credit risk.
Keep it consistent
The way your address or name appears on your credit report can also make a big difference to lenders. If you’ve had issues with credit checks not being able to verify your details in the past, looking at the format of your personal details can be a good place to start looking. For e.g., you could be using Rob instead of Robert or an address with or without a house name in your documents.
Continue to track
Keeping a track of your credit report is not difficult, and many credit reference agencies allow you to check your credit score for free. You can carry out a credit check online with one of several credit reference agencies, such as Experian, Equifax, or TransUnion, to help understand your chances of getting credit or the steps you need to take to improve it.
Paul Campion is a wealth planner at Succession Wealth