Your credit score may not be something you have given much consideration to. This is especially the case if you are yet to take out a mortgage, and have no intention of doing so in the immediate future. Nevertheless, it is critical to maintain a good credit score, as this will have an impact on your lending capability. While this may not seem like a big deal now, things can easily change, and you will find yourself in a spot of bother if you can’t borrow any money for the next six years because you have late and missed payments showing on your account. With that in mind, read on to discover some top tips on improving your credit score in 2018.
There is only one place to begin, and this is by educating yourself. A lot of people don’t understand their credit rating or the impact it has. After all, it is not something we got taught about in school. It is important to recognise that you do not have one single credit score. There are a number of different agencies that put credit reports together for lenders to view. Some companies will use one credit report to base their opinion, while others will look at several. If you do a bit of digging online, you will be able to see which lenders look at which reports. Nonetheless, as most of the same factors are considered, you can assume that your report should be similar across all platforms. You can also gain access to your report yourself. This is a good idea, as not only will you be able to see your credit score, but you will discover all of the different factors that have an impact on your report, i.e. the positives and the negatives on your account.
Think twice before borrowing money
Before borrowing money this year, make sure you assess your options carefully and the impact the loan or credit card is going to have on your report. You also need to ensure the loan or credit card you choose is right for your situation, i.e. that you can make the repayments. If you miss a payment, this can stay on your report for six years, meaning it will scar your financial standing for a very long time.
You can find out more about taking out a loan at UnsecuredFinanceAustralia.com.au. It is always better to go for a lender that gives you all of the information up front so that you can make an informed decision. It is also a good idea to find out whether you qualify for the loan or credit card before applying. This is because all applications will show on your credit report, and if you make a number of applications within a short period of time, this is going to have a negative impact.
Start paying off the money you have borrowed
If you currently have credit card debt, you need to make an effort to pay it off. You can find out more about this in one of our previous blog posts at onefrazzledmum.com. There are a number of approaches you can use, including good old-fashioned saving, debt consolidation loans, and balance transfers. With regards to the latter, there are many promotional offers available today whereby you will benefit from 0 percent interest on balance transfers for a certain period of time. This means that you can pay off the money you owe without accumulating interest every month.
This is a good option for most. However, you do need to put together a financial plan for paying the debt off. Don’t simply decide you’re going to put whatever money you have left over each month. Instead, assess your incomings and outgoings, and look for areas to make savings. Moreover, determine how long you have to pay off your credit card and make a plan regarding how much you are going to pay off every month.
Additional steps to take to boost your credit report
There are a number of other things you can do to increase your credit score over the course of 2018. Firstly, make sure all of your personal details are up to date. This is one of the easiest and most effective ways to boost your score. If your personal information is not correct, lenders may not be able to verify who you are. Moreover, you may miss important notifications about any payments you owe, which could result in you missing a payment, and we’ve already mentioned how damaging this can be. Aside from this, you should avoid opening any new credit card accounts if you can help it. This will allow the average age of your accounts to grow, which will have a positive impact on your score.
Moreover, paying off your debts will help, as mentioned above, because this means you are using a lower percentage of the credit that is available to you, which is a big plus. It is also a good idea to take a look at your credit limits. If your credit card has a limit below £1,000, this could have a negative impact. It indicates you are a high-risk borrower. It is a good idea to have at least one credit card with a limit above £1,000, so it could be worth looking into increasing your limit on one of your cards. You don’t need to do this for all accounts; simply ensure there is one with a limit above £1,000.
So there you have it: some top tips for improving your credit score this year. Even if you already have a good credit score, it is important to take the steps to maintain it. The last thing you want to do is cause your score to get worse by doing something that has a negative impact on your report. Unfortunately, a lot of people do this without realising it, which is where education comes into play.