Rising costs mean that more of us than ever are struggling to make ends meet, and perhaps thinking about taking out a credit card or loan to pay for larger purchases. When you apply for any type of credit, the lender will assess how likely you are to be able to pay it back. This is called credit scoring, and in general terms, the higher your score, the greater your chances of being approved. It’s also easier than ever to check your own credit rating, using websites like Clear Score, or apps like Credit Karma. If you’re thinking of applying for a new line of credit, or are going for a position which requires credit checking through a third party, then here are some easy steps which you can take to improve your score.
Register to Vote
One of the basic checks which a bank will do is to make sure you live at the address stated on the credit application form, which they do by checking the electoral roll or register. There is no charge for having your name added to the list, and you can add yourself at any time by googling “register to vote” and following the steps on the government website.
Limit Your Applications
If you apply for lots of new credit in a short period, lenders can perceive you as desperate and will be concerned that you may not be able to pay it back. Take advantage of the eligibility checkers which will give a general indication of whether you are likely to be accepted for credit rather than doing hard application checks. Only make a hard application for credit which you know you are more likely to be accepted for.
Pay By Direct Debit
Lenders give higher scores to people who opt to pay their phone contracts, electricity bills oy gym memberships direct from their bank account rather than waiting for a bill to come in, and then paying. Setting up direct debits to cover this cost demonstrates you are financially reliable, and have the income needed to cover regular costs.
Correct Errors
Not everyone’s credit record will have mistakes on it, but if yours does, asking the credit reference agencies to remove the error can raise your score instantly. Look at any CCJs or defaults on your account as these can be challenged if you can prove that they were applied unfairly, perhaps because you’d moved house and never got the letter. You may have to approach the original lender or court to get any unfair default removed.
Joint Accounts
If you have joint accounts with someone who struggles to manage their finances or who has a very low credit score, this can affect you too. This applies whether you are living together or not. Separating out finances and showing that you personally are a better risk should improve your credit rating. The downside is that this might take some time and isn’t the instant win of other steps such as challenging errors.