10 Things You Must Know To Boost Your Credit Rating

Do you know what your credit rating is? If you do – is it good, bad or just average? Perhaps it’s something you have never taken into consideration, but a weak credit score could come back to haunt you when you need to borrow money – to buy your first home, perhaps.

You can check your credit report for free if you don’t know what your rating is – this is important not only so you are aware and can do something about it if it is poor, but also in case there are any mistakes.

Your credit rating is used to help lenders decide whether to lend you money or not, how much to let you borrow and sometimes even how much interest to charge you – so it is vital you know what it is and are always looking for ways to improve it.

So, with that in mind, here are 10 ways you can improve your credit score:

1. Stop Applying for Credit

If your credit score is poor, then an immediate step you can take to improve it is to stop applying for credit – credit applications are filed on your record, hold fire just until you have sorted out any problems on your credit file and improved your score.

2. Get On The Electoral Register

If you have never voted before then your name will not be on the electoral register. Not only are you unable to have your say when it comes to voting, if your name isn’t on there you will also find it much harder to get credit. You can register to vote online right now, enabling you to get your name on there instantly. This is a quick and easy win to boosting your score.

3. Pay Off Existing Debt

Of course, it goes without saying, that to increase your credit rating, you must pay off any existing debt. Banks and credit card companies will be unlikely to lend you more if it appears that you are already overstretched. If you do have existing debt then it is vital you show lenders you can borrow responsibly – because in time, this will improve your credit score. Make your repayments on time and even pay off accounts early if you can.

4. Pay on Time

Missing or making late payments on your mortgage, credit card, personal loan, gas or electricity bill will stay on your credit file for six years! So, make sure you budget so you can afford to pay these off and keep a close eye on when they are due so you don’t miss one. Where possible, try to align these to come out via direct debit straight after your pay day.

5. Use A Credit-Builder Pre-Paid Card

Some prepaid cards have a credit building option that can improve your credit score. So, you are loaned an amount – you agree monthly repayments and at the end of the year (as long as you haven’t missed any) this will be recorded on your report as one year of successful repayments.

6. Credit Builder Credit Card

You have probably heard that getting a credit card is a good way to improve your credit score – providing you use it to show you can borrow and pay off money.

If you have a poor credit history then there are credit-builder credit cards available – although it is important to be aware that the interest rates charged are much higher than standard credit cards.

7. Cancel Unused Credit Cards

If you are planning on improving your credit rating so that you can apply for a mortgage or other large credit application you should know that lenders will look at how much credit is available to you, not just how much you are actually using. Holding, using and paying off credit cards can benefit your rating, however, if your cards are sitting there unused then pull the plug! 

8. Avoid Expensive Credit Repair Companies

Credit repair companies often sound too good to be true and unfortunately that is usually because they are. Credit ratings are pretty black and white, regardless of their help you will need to improve your credit rating yourself so avoid where possible paying someone else to do it.

9. Avoid Joint Credit With People With Poor Credit History

Being tied into joint forms of credit such as bank accounts, loans or mortgages with someone who has poor credit history will affect your ability to gain credit due to a ‘financial association’. Disassociating your credit from theirs is most often the best thing you can do for both parties in the long run until you both have good credit history.

10. Remove Any Mistakes On Your Credit Report

One of the reasons it is so important to check your credit report is in case there are any mistakes. It is not at all uncommon to check a report and find that someone has fraudulently applied for credit in your name. If this is the case you can contact the related company in question to have the instance investigated and removed – boosting your credit rating very quickly.