5 steps to improve your credit score
So, you have your credit score and it’s not looking as pristine as you thought. Trying to take hold of your personal finances and improve your score can seem daunting. We want to help so here’s 5 easy steps to move towards a better credit score.
Step 1: Pay your bills on time
Late or defaulted repayments are the easiest way to demolish any chance of a good credit score. Contrary to this, the impact of constant and timely repayments is one of the best ways to redeem it.
It’s important to know that each time you miss a repayment on your credit card, phone bill, etc, it can impact your credit score.
Remember that an overdue payment will remain on your credit report for 5 years. Some ways to manage numerous expenses can be calendar reminders, direct debits or you could consider debt consolidation under one personal loan.
The simpler the better.
Step 2: Only apply for credit when you need it
A common mistake people make when looking for credit is to apply for multiple loans as a means of research
This is a big no no.
Each time you apply for credit, whether this is a credit card, personal loan, car loan, etc, your credit score goes down. Every one of these applications will go down as an enquiry and become stuck to your credit report.
By making too many enquires in such a short period of time, your credit score goes down and lenders become hesitant.
Rule of thumb going forward – ask yourself whenever you’re tempted to apply for credit….
“Do I really need this?”
Step 3: Do your research before you apply
Research may sound tedious and you may be tempted to go with the easiest option, but remember there are so many comparison websites that can make this easy for you. Take time to fully consider what you need and what type of credit product will best suit your needs.
As tempting as it is to tick the terms and condition boxes, it is crucial to read all the fine print. You need to make sure the product is the right fit for you and your current circumstances. Often the most appealing credit cards and loans with the most perks, also have the highest fees.
Step 4: Take ownership of your credit profile
Essential to an improved credit score is an active credit account. Having an active account proves your existing commitments.
Start small and take ownership of your credit profile.
This means that even if you and your partner split bills but all the accounts are under their name, your partner’s credit profile is building while yours is remaining the same.
Some types of credit that aren’t so obvious are Internet bundles and phone plans in the midst of your credit cards and mortgages.
If you are paying, have your name on the account.
Step 5: Regularly review your credit report
Keeping an eye on your credit file is an effective method of preventing any suspicious activity.
Unfortunately, some things the affects your credit score are out of your control such as identity fraud.
When reviewing your personal credit report watch out for any unusual applications or anything you can’t remember applying for. There’s no harm following this up just in case.
If you have an application that has been declined you are easily able to obtain a free credit report. There’s no harm double-checking anything strange, even if it is just for personal peace of mind.
It's always good to be rewarded for being responsible with your finances, which is why SocietyOne offers lower rates to borrowers with a good credit profile.