Are you looking for ways to improve your credit score - check out our top tips and make a start today!
Your credit score is the single most important element that almost all loan and credit card companies will turn to when determining whether or not to lend you money.
In addition to this a great credit score could mean the difference between a low interest rate (the interest incurred that you have to pay back on top of your loan) and your chances of getting approved for a loan or credit card at all!
Even if you are approved, with a poor credit score, you could end up paying out a huge amount of interest on top of the amount you’ve borrowed.
Check out our top tips to help improve or maintain your credit score:
1. Make credit card and loan repayments on time
This is probably the most important way of helping to improve your credit score. Payment history is the main factor that goes into determining your credit score.
2. Control your debt
Don’t get into more debt than you can afford to pay back and always ensure that you control your borrowing. If you already have outstanding debt then it’s imperative to make repaying this the number one priority and avoid all other debt if possible until this is paid off.
3. Control the balance on your credit card
It’s tempting to pay-out for everything on your credit card – don’t do it!
You have to remember that, just because you’ve got a £2,000 limit (for example), doesn’t mean you have to spend the full balance. It’s worth bearing in mind that you could well need this some day for some form of emergency such as urgent repairs or unexpected bills.
Apart from this it can also prove much harder to pay-off a larger balance quickly and may need to be spread over a period of time. This could be detrimental to your credit score.
4. Try to avoid applying for too many loans or credit cards in a short space of time
Each and every time you apply for a personal loan, credit card or mortgage this inquiry will show up on your credit score (usually Experian or Equifax). Unfortunately having too many inquiries on your credit history could have an adverse effect on your score and they will remain there for around 2 years. Since a single inquiry slightly affects your score just imagine what a number of them would do!
5. Talk to your lenders
If you’re really struggling to pay off your debt then talk to your lenders and arrange a payment schedule at a monthly amount that you can actually afford to pay back.
6. Avoid bankruptcy at all costs and consider consolidating your debt
Whilst filing for bankruptcy certainly appears to be the easiest solution to many people faced with large amounts of debt it’s not always the best route to take. Going down the bankrupt route is the single worst thing you could do to your credit score. Bankruptcy could result in an inability to borrow money for around 7 years. Any mortgage loan company, car financing firm or secured lenders will turn down an applicant with a bankruptcy listed on their credit report.
Consolidating multiple debts into one lump sum could be the solution to improving your credit history if your debt has grown to an uncontrollable level. This should really be seen as a last resort but is certainly something worth considering if you are really struggling.
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