7 Tips To Improve Your Credit Score


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7 TIPS TO IMPROVE YOUR CREDIT SCORE

It’s one of the most important elements when applying for, and being successful in getting the mortgage that you want, but not many people truly fully understand their credit score and its importance. Below we give you seven tips to help you improve yours.

  1. Know you score: Each lender has its own system for deciding whether or not to lend to you – meaning you could be rejected by one, but accepted by another. However, as you would expect it helps to have a ‘good’ or ‘excellent’ credit score, and the main three credit reference agencies use the following scales:  – Equifax 531 to 670 is good; 811 to 1,000 is excellent.  – Experian 881 to 960 is good; 961 to 999 is excellent.  – TransUnion 604 to 627 is good; 628 to 710 is excellent.
  2. Check for mistakes: Given the ever increasing rise in identity fraud, and just how important your credit rating is, it’s recommended to check your file at least once a month to ensure that all the information shown is correct and up to date. Balances will take a while to be updated, but if you notice something is wrong then act immediately by contacting the company, who will then investigate. 
  3. Electoral role: We’ve said it before and we’ll say it again – ensuring you are on the electoral role is crucial. It’s a UK database of who lives where, and if things don’t match then you will hit a big problem. Registering can be done online – it only takes five minutes and can be done by clicking here.
  4. Avoid multiple applications: If you’ve been turned down for credit it’s unwise to apply for another credit card or loan immediately. A lender will view multiple applications over a short period of time that you’re in financial difficulty. Credit card and loan applications should be made at least 3 months apart, if not 12, as each application (whether successful or not) shows for 12 months.
  5. Keep credit usage low: Lenders will look not only at your outstanding balances, but at how much credit you have available. If you have low available credit lenders may see this as a sign that you’re not successfully managing your finances. As a rough guide, borrowing more than 90% of the limit on a credit card can knock 50 points off your credit score, whilst keeping your balance below 30% of the limit will boost it by 90 points. 
  6. Don’t miss repayments: A missed payment will show on a credit report for six years, and even if you’ve only missed one payment your score will be badly affected. A single late payment on a credit card or loan can dent your score by as much as 130 points according to Experian.
  7. Pay more than the minimum: If you only make the minimum repayment each month on your credit card then lenders may assume you’re struggling to clear your debts. It’s good practice to pay more than the minimum amount each month (or ideally pay the full amount) to help clear the debt faster.
Not quite ready to start the mortgage process just yet? Maybe you have a question you want answering? That’s fine, we’re here to support you when you need us – just contact us and we’ll be happy to help.
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You may have to pay an early repayment charge to your existing lender if you remortgage.
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