Monday, 18 January 2016

How to get your credit score in order


I know a lot of people who feel the strain after Christmas, and being skint in January is nothing unusual. As parents, there are many added pressures we face in our daily lives, and juggling money is definitely one of them. There’s always been a bit of a stigma when it comes to borrowing money, and obviously no one enjoys being in debt, but turning to personal loans are a reality for many of us, and there’s no shame in doing so.

The important thing to note when it comes to unsecured borrowing is to ensure that your credit score is optimised. After all, this is the main determinant for the interest rate you will have to pay on your loan. Even though it’s very pertinent for all of us, it’s interesting how little is known and understood about credit ratings, and, more importantly, what can be done to improve them.

Having looked into it a bit myself, I picked up five easy tricks which can really help the cause, and ensure that if you’re in the market for an unsecured loan, you can get an affordable rate…

1)      Use your credit card cleverly
It’s not naughty to use your credit card. In fact, it’s to your detriment if you don’t! The key is to use it every month, but only in manageable amounts. Come your repayment date – and this is the important part – make sure that you pay off every single penny. You want to start the new month on a zero balance. You should also request as high a limit as possible from your provider.

2)      Prove your worth
It’s one of the reasons students battle to get loans (other than from payday lenders), as, without having a credit history, they can’t demonstrate an ability to pay off debt. What you want to do is set up as many lines of credit you can afford to pay off. Cards, overdrafts, gym memberships, car finance, even mobile phone contracts. These are all obligations which, if paid on time, will prove you are financially responsible.

3)      Get on the voters’ roll
If you aren’t already, it’s crucial to register yourself on the electoral roll. For a lender, it’s all about visibility, and being easy to trace you. Even if you don’t actually vote, make sure you are on the register. It only takes a couple of minutes, and you can do it online by clicking here.

4)      Know what you’re dealing with
Many people think a credit score is a pie-in-the-sky, wishy-washy number lenders use as a stick to beat you with. In actual fact, you can get your hands on both your summary credit report and score itself from any of the three main UK credit experts – Equifax, Experian and Callcredit – for as little as £2. It’s worth doing as it will give you an idea of where you stand, what patterns there are, and what habits might be helping or hurting you. What’s more, if there are any mistakes in there regarding late payments or anything like that, you can contact the credit reference agency and file a ‘notice of correction’ to ensure your file is accurate.

5)      Don’t go crazy on your loan hunt
When you get a quote for a loan, always check first to see whether the lender will be doing a soft or hard search. If it is the latter, it will leave a footprint on your credit file, and if you have gone on a treasure hunt and applied in numerous places with numerous different lenders for a loan, it could indicate that you’re very credit hungry, and perhaps in financial trouble. So if you do need a loan, be careful, and very selective about where you apply for quotes.

So there it is, five tips that don’t require very much effort, but may just help you out in the long run. I hope this can be of help to you!

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