It’s easy to underestimate the importance of good credit until you come to do something like buying a house, and suddenly it’s the most important thing, and you have to work to improve your score. Luckily there are several things that might be affecting your credit score, and once you find them, you can look at improving them.
Your credit rating tells potential lenders how trustworthy you are and how much of a risk it would be to lend you any money you apply for. If you need support with getting out of debt, Creditfix can help you get a handle on it, and work towards improving your credit score.
Not being on the electoral register.
This is a nice, easy one to fix as it simply involves registering to vote. This helps companies confirm that you are who you say you are and prove where you live. Even if you’re living at home, or are currently in university accommodation, be sure to register to vote, not just so that you can exercise your right to vote, but also as a way of signalling to potential lenders that you are who you say you are.
Regularly applying for credit
If companies can see that you are applying for credit too often, it can start to look as though you can’t afford much without credit, which will make them think that you may not be able to pay them back what you borrow from them. Remember, this doesn’t just include credit cards, but also overdrafts, loans and store cards, as well as anything that you lease, such as a car or even a sofa. It’s okay to apply for credit of course, and it can help us to get the things we want and need, by spreading the cost but be mindful of what you’re applying for.
Using too much of your credit
So you’ve been given credit, but don’t feel that you have to max it out, just because it’s there. It’s better to have a bigger limit, and use a smaller percentage of it, than use the same monetary amount of a lower credit limit, and be closer to maxing it out. Ideally, try to keep below 50% of your available credit.
If you miss payments or default, this will stay on your credit record for six years, so be sure to set up direct debits and make sure that there is always enough money in your account to cover them. A lender needs to see that you are consistent in paying back the money you owe.
Having no credit history at all
If you’ve never used any credit, a lender won’t be able to know whether to trust you or not. You’re starting with a blank slate, which is excellent, so why not apply for a credit card, and make a few necessary purchases each month, and then pay it off in full every time your statement comes in, to show how trustworthy you are.