If you make the most of your credit score it will impact on so much more of your life than you initially imagine. As well as effecting mortgages, loans and credit cards it will influence mobile phone contracts, car finance, insurance and even the types of bank accounts you can get. So it is important that your credit score is the best available though it will not be the only factor that decides whether a company will lend to you, after all it is just a tool they use to determine if they will be making money from you.
Prove where you live
If you are on the electoral register that is a boost to your credit score as it proves your current address. This applies even if you are sharing accommodation or living at home. If you are ineligible to be on the electoral register you can send proof of residency to the three credit reference agencies, proof would include a driving licence or utility bill.
Check your credit score
Look at your credit score and check it against your details. Make sure that there are no errors or fraud on there as even small errors can cause problems. It is useful to check this each year and before any new application for credit.
Build some history
As companies predict future actions based on your past, if you have no credit past, they have nothing to work from. Initially if you get a credit agreement and pay on time that can start to create your history. A good example of this could be a phone contract, or a credit card. When you pay these on time it show that you can manage your money and pay your bills when they are due.
Make payments regularly and on time
As important as having some credit history is, having it show that you are reliable and keep up with your commitments is even more so. If you can show over a period of time that you are a good payer that positively impacts your score and if you keep a single line of credit over a longer period it shows that you are consistent.
However, remember that even though having one card that you have used for a while it in not to your benefit to have a string of cards with credit available as you are judged by how much credit you have available. Make sure that you track your spending during this time so that you can keep up with the monthly payments.
Stay well below credit limits
Part of your credit score looks at how much spare credit you have, so if you have a credit limit of £1600 and you have used £800 of it that’s half of your possible credit. To have the best chance of improving your credit score try to use less than a quarter of the available credit.
Apply for credit as little as possible
Each time you apply for credit, it leaves a stain on your credit history, so if you are applying for credit with a lot of different lenders that has an adverse effect on your credit score as it make it look liker you are desperate for credit rather than surveying your options.
A way to avoid this is to use an eligibility calculator to check what you would be entitled to with different lenders. If you have your credit score from one of the credit reference agencies, they will offer the service and this will leave a soft search on your credit file that you can see but that lenders cannot.
So overall the best ways to improve your credit is to work with the credit reference agencies so that you have proven that they have your information correct, you have kept up to date with all credit obligations, you stay well below your limits and you only apply after checking you will be accepted. Once you have a good credit score it is important to keep it as it can take years to create and weeks to destroy.