Your credit score is really important when it comes to applying for loans, finance, credit or anything other forms of borrowing. Having bad credit doesn’t necessarily mean you will get declined for all types of credit, but it can make it harder to get approved.
What are the benefits of a good credit score?
There are a range of benefits of having a good credit score, they include:
- Higher credit limits
If you’ve got a good track record of being able to pay your bills back on time and in full then you can benefit from higher credit limits. This is because potential lenders see you as more trustworthy.
- Lower interest rates.
Being offered a lower interest rate is a massive bonus. This is because it lowers the total amount you will pay on a loan, meaning you have more money to spend on other things!
- More chance of getting approved.
As mentioned above, having a higher credit score means you are more likely to be approved for finance or credit. This is because lenders have more faith that you will make your repayment on time and in full.
Easy ways to improve your credit score:
1. Credit check
The first thing you should do is check your credit file. Before you start rebuilding your credit you should perform a credit check to see where you stand on the credit scale. If you’ve got bad credit, then you may already know where you’ve went wrong over the years. Check that all your information is accurate and up to date. If not, you can contact your credit referencing agency to update any details.
2. Register on the electoral roll
The electoral roll in the UK lists everyone who has registered to vote in UK elections. The electoral roll is also recorded on your credit file and can help lenders verify that you are who you say you are, and your address history is up to date.
3. Close any unused accounts
If you have multiple open accounts then lenders may think that you have a lot of credit available to you already and may not want to give you anymore. It’s best to close any accounts that you don’t use.
4. Limit credit applications
If you make multiple applications in a short space of time, then it can indicate to lenders that you are reliant on credit. If you were applying for bad credit car finance and wanted to shop around for the best car finance deal possible, you should stick to soft search applications only. It can harm your credit score if you make a lot of hard searches on your credit file.
5. Check your credit file for fraudulent applications
You should get into the habit of regularly checking your credit file, when you do you should keep an eye out for any credit or finance applications that don’t look familiar then you may have been the victim of a fraudulent application.
6. Pay your bills on time
One of the easiest ways to keep your credit score in check is to keep on top of your finances. Regularly making all your payment on time and in full can help to increase your score, it proves to lenders that your capable of managing our finances correctly.
7. Disassociate yourself from any financial partners
When you take out a joint car finance application with someone, you then become financially linked. Being financially linked to someone with a bad credit score could be negatively affecting your score too. You can contact your credit referencing agency who provided your credit file to disassociate yourself from them if you no longer have any active credit.
8. Use a credit card little and often
If you have bad credit due to have no credit history, then you could consider a credit building card. Using it little and often and paying the amount back in full on time can help to increase your credit score.