Top 5 Ways For Boosting Your Credit Score
Your credit score is affected by lots of different things, and it can be tricky to boost it back up once it drops. You might not even know that your credit score has dropped until you applied for a payday loan online and got rejected. However, there are ways you can easily build your credit score back up to enable to be approved for the finance you need. It will take a little bit of work and time, but with some effort, you find your credit score have climbed back up in no time! So, to help you get back in control of your credit, here are the top 5 ways you can boost your credit score.
Don't Miss Any Payments
If you regularly miss bill payments, not only can you be charged a late fee, but it can actually drastically reduce your credit score. Your payment history actually affects about 35% of your score, making it the highest contributing factor so it's easy to see why it's necessary to pay on time. Once you've paid off your debt, you might think it's a good idea to remove it from your score. But, in reality it's better to leave your paid off debt where it is. Having proof that you can not only pay off a debt, but make your payments on time, will do wonders for your score, and demonstrates to lenders that you're a safe borrower. If you struggle to make your payments on time, try automating them or setting up reminders on your phone or calendar. This way, you're not only paying your bills on time, but you're also boosting your credit score.
Use Less Of Your Credit Card
Having a credit card and paying it off regularly is a good way to build your credit score. But did you know that using too much of your credit can actually be a bad thing? If your credit card limit is £1000 and you use £900 of it, this works out at about 90% credit utilisation. Really, you want to aim for around 30% or less to help keep your credit score high. If you find that you use most of the limit on your card, but you can regularly pay it off, it might be a good idea to ask for an increased limit. This means that you can use the same amount, but it will lower your credit utilisation.
Moving home a lot can be something you can't help, and your circumstances may have made it necessary at the time. However, moving a lot can sometimes show instability to a lender, making them more likely to reject your application. This can in turn cause problems for your credit score as their credit check and rejection will cause it to decrease. You should also make sure that you're registered on the electoral roll for your current address as this can help improve your credit score and it takes barely any time at all to do.
Review Your Credit Score Report
You can request your credit report free of charge once a year. It's important to keep an eye on it as it can also be a good indicator of any fraudulent activity that's happening under your name and affecting your score. You should also check the little details like your address. If you've moved a few times, your credit score might not have caught up with you yet. Or there could be a small typo which won't match any finance application forms you complete. This can then reduce your credit score as you keep getting rejected by different lenders. Checking your credit report once a year will allow you to keep on top of it and helps you catch any abnormalities. If you spot something that's wrong and has impacted your credit score, you can request that it's removed, thus helping increase your score.
Don't Apply For New Credit
If you want to improve your credit score, then you shouldn't keep applying for new finance. When you apply for any type of loan or credit card, most lenders will complete a hard credit check. This is where they do a full check on your credit report and each time a lender does a hard check, it's added to your current report. Other companies will then be able to see every hard check you have on your account and if you have too many, it can lower your credit score. Similarly, if you keep applying for finance and getting rejected, this will also show on your credit report and affect your score. Generally, hard credit checks stay on your report for a year so applying for too many loans or credit cards can be a bad sign to lenders. If you're being refused finance or your application is denied, this will signal to other lenders that you're risky to lend too as you'll have lots of hard credit searches and rejected applications. Sometimes you might have to apply for finance, so if you do, make sure you only apply for ones you're likely to be approved for. This will limit the amount of credit searches on your account and help keep your score high. There are soft credit searches that don't appear on your report and don't impact your credit rating, so if you're looking at other types of finance, make sure you know what kind of search will be performed.
If your credit score isn't the best, you don't have to accept it and struggle because there are things you can do about it. It may take a little bit of time and dedication, but it will definitely be worth it in the end. Improving your credit score may seem impossible when it's at an all time low, but it can be brought back to life by utilising these 5 tips above. You'll soon be able to see the difference and feel confident when you apply for finance.