Your credit score is more than just a number; it’s a key that can unlock doors to financial opportunities. One of the main factors that can impact your mortgage application is a poor credit rating, as lenders will perceive you as financially unreliable. Your credit score is impacted by a lot of long-term factors but also can be improved by small quick fixes that you can implement to make a positive difference in the short term. In this informative blog post, we’ll guide you through the steps to boost your credit score swiftly and strategically.
1. Register on the Electoral Register
It’s a little thing that only takes minutes, but it can add a lot of points to your rating. Having your name on the electoral roll is a sign that you are stable and dependable and rooted in the community. If you’ve recently moved or changed address for any reason, you may no longer be registered so it’s always worth checking on the government website or reapplying.
2. Pay Your Bills on Time
One of the most influential factors affecting your credit score is your payment history. Ensure that you pay all your bills on time, including credit cards, loans, and utility bills. Set up reminders or automatic payments to avoid missing due dates.
3. Avoid Using Your Credit Card at ATMs
Using your credit card at an ATM incurs high interest rates straight away and comes with cash handling fees on top of that. Lenders can consider these types of withdrawals, especially if they’re regular, as evidence of poor financial habits. It can also harm your credit score if the amount you withdraw causes your credit utilisation ratio to rise.
4. Avoid Opening New Credit Accounts
Each time you apply for a new credit account, a hard inquiry is made on your credit report. Multiple hard inquiries in a short period can lower your credit score. Be cautious about opening new credit accounts unless it’s necessary for improving your credit.
5. Use and Repay Your Credit Card Regularly
Keeping up regular, efficient payments on your credit card shows responsibility, you are money secure, and that you are on top of all financials. Use your credit card for small transactions, food shopping, train fares, small bills, then promptly pay them off every month.
6. Become an Authorised User
If you have a trusted friend or family member with a good credit history, consider becoming an authorised user on one of their credit cards. You don’t have to actually use the card or even have access to it for your credit to improve. This will vastly help someone with very new credit.
7. Be Wary of Joint Accounts
If you’ve got an old bank account you had with an ex-partner, you could still be linked in terms of credit. To dissolve this association, request that a ‘notice of disassociation’ be added to your file. In the same vein, be cautious of opening new joint accounts with someone with poor credit, as it will impact your own.
8. Monitor for Mistakes
Your credit score is compiled up of a vast amount of data and some errors can slip through the cracks. You have the right to obtain free weekly reports from the three major credit bureaus, so visit AnnualCreditReport.com to make your requests, then carefully review the reports for any errors. The most common is payments marked as late when they were paid on time, so ensure you double check any flagged payments.
9. Prove your creditworthiness
If you’ve never borrowed money before, it can be hard for lenders to gauge whether you can be trusted with it and can meet your repayments. This inaction can impact your credit score. To prove your reliability, take out a small amount of credit, like a credit card or arranging an overdraft, and ensure its managed and maintained well. This will lay the groundwork for larger loans in the future.
10. Show stability
If you aim to have a mortgage or take out a loan in the next few months, prove your stability in your finances and in your lifestyle. Don’t pay any big payments and don’t move home. Your address links your identity and financial activity, which shows your circumstances are secure.
Improving your credit score quickly is a goal that’s achievable with the right strategies and commitment. Remember that your credit score reflects your financial responsibility, so making positive changes will not only boost your score but also improve your overall financial well-being.