Whether you’re looking to buy a house, a new car or need to make some home improvements, you’ll probably want to have a look at your credit report. That missed payment a few months ago could still be having an impact now, and if you’ve got a less than perfect score, then your chances of finding a good deal are lower.
The good news is that improving your credit score is easy; you just need to know how to go about it. It also helps to find out what could be making your credit score low, such as:
- High levels of existing debt
- Having a CCJ (County Court Judgement)
- Missing or late payments
- Applying for lots of credit all at once
You might even find that there is a mistake on your credit file that needs amending, or that you’ve been a victim of fraud. To access a copy of your report, you’ll have to visit a site such as My Credit Monitor’s free credit report check. This allows you to see your credit report and check to make sure it’s all accurate.
So, now the bad stuff is out of the way, what can you do to improve your rating? There are steps you can take right away. These include:
Stop applying for credit. Each search can bring your score down, so stop applying for credit until you’ve managed to restore your credit file and improved your score.
Cancel any unused credit accounts/cards. You may not realize this, but old accounts left open can also be bringing your score down. You would also be less likely to notice if the details were stolen and the accounts used.
In the longer term, the best ways to stay debt free are relatively easy to follow. For starters, make sure that all payments are made on time. This helps lenders to see that you are a sensible borrower and can afford your repayments.
You can also use a credit-builder credit card. These are designed to help people with bad credit improve their credit rating, but beware that they often have higher APRs (Annual Purchase Rate). The best way to use them is to make small purchases and clear the balance in full every month. That way, you avoid the interest charges, and it shows lenders that you are meeting your credit responsibilities. This increases your credit score over time as it shows you to be a lower risk.
If you split from a partner, also remember to split your finances together. You can ask the credit reference agencies for a notice of disassociation to show that your finances are no longer linked. This can is done so their future financial behavior won’t impact you. You will have to close or transfer any joint accounts to individual ones to get this done, but it will be worth it.
You can limit the amount of searches done when applying for credit if you use the free eligibility calculators. If you are going to be applying for a loan or credit card, you can use a soft search to see the likelihood of your application being approved. It’s not always accurate, but it will help cut down on the amount of full credit searches on your file.