Ways to Boost Your Credit Rating


Boosting Your Credit Rating

boost your credit ratingA healthy credit score is one of your most valuable assets when applying for credit, loans and mortgages. Lenders will check your credit score when you apply to borrow funds from them and make a judgement on whether you are a risk to lend to – essentially, it proves that you are responsible with money and likely to pay back when you owe when required.

So what can you do to ensure that your credit report remains squeaky clean?

Check your credit report

You can see your credit report by apply to view it with any of the three main credit agencies in the country:  Experian, Call Credit and Equifax. You can get a one-off copy for just £2.

Every time you expect to apply for credit, check over your credit report. It’s a good idea to check it every now and again just to make sure everything is in order.

When you have your credit report, be sure to check it carefully. If any information is wrong, or if previous lenders have made at least one glaring error, it could affect your rating. You’ll need to contact the credit agency in the case of a discrepancy, and they should be able to correct it in due course.

Also, make sure your address is correct and your old addresses are accurate – this is very important, especially if waiting for your report to come in the mail. Mistakes relating to your current and previous addresses could adversely affect your credit rating.

Stability counts

If you’ve lived at the same address for a number of years, you’ll be more attractive to lenders. Simply being on the electoral register boosts your credit rating too, as will having a fixed home phone number.

If you have any credit cards you don’t use, cancel them. Dormant credit cards don’t look too good on your credit report – agencies and lenders may find that if you have them, you’re not that responsible when lending money.

Applying for lots of credit all at once will show up on your credit report, and does not look good to other lenders. On the whole, having a credit card to help you out when you’re feeling the pinch can help you as long as you stick to the repayments each month.

Regarding using credit cards when sticking to a budget, a representative from Yorkshire Building Society suggested: “Set up a regular savings account and shop around to make sure you get the best rate. Ensure that you are on the electoral roll as this can improve your credit score.

“Review your day-to-day spending to see if you can make any cuts to increase your savings, then set up a budget for essentials and stick to it”, they added.

Don’t ever miss your payments

Missing repayments on credit cards and loans even by a few days can negatively affect your credit score, and the missed payments will show up on your credit report for the next six years.

Related Posts Plugin for WordPress, Blogger...

Stay Connected with The Frugal Toad

Subscribe to our e-mail newsletter to receive updates.

, , ,

12 Responses to Ways to Boost Your Credit Rating

  1. Little House 08/16/2013 at 6:53 am #

    I agree with all of these tips except cancelling a credit card. It reduces the overall amount of credit banks have lent a person, which could affect their debt-to-credit ratio negatively. A better idea is to use those dormant cards once every six months on small items then pay them off within 2 weeks – just long enough to post to your statement but not accrue interest.

    • Paul 08/17/2013 at 8:18 am #

      You should never cancel a credit card with a good credit history however, dormant accounts with no history of use should be canceled.

  2. Thomas | Your Daily Finance 08/17/2013 at 4:49 am #

    Don’t miss payments and checking those reports are biggies! Don’t forget making sure you have a mixture of types of credit like loans as well as credit cards. One people forget is having low balances. Nice tips i wouldn’t cancel a credit card with good history though.

    • Paul 08/17/2013 at 8:15 am #

      Absolutely agree with you Thomas about not canceling a credit card with a good credit history. It’s also a good idea when you are reviewing your credit report to look for accounts that have no history and close those. Total available credit is an important component in your score.

  3. cj 08/17/2013 at 6:34 am #

    Paul! Fine, fine points all here. I suppose we had no idea how stable we really were. When we purchased our last vehicle at the end of 2011, I was shocked by our 800+ credit rating. I figured it would be acceptable because we never missed payments and we were very responsible with $$$, but we did not expect such a nice score. It would be healthy if we checked our scores more often however. Have a happy, tiny and sweet toad of a weekend!!!

    • Paul 08/17/2013 at 8:12 am #

      Wow, that is a great credit score CJ! Your score is high precisely because you are very responsible with money. Well done!

      • cj 08/18/2013 at 11:02 am #

        Thanks man! Hope you had beaner of a weekend!

  4. Marissa @ Finance Triggers 08/17/2013 at 8:16 am #

    Just make sure you pay your monthly balance on time and in full, and check your credit report to make sure it’s error-free.

    • Paul 08/17/2013 at 4:00 pm #

      Sounds simple enough but you’d be surprised how many don’t follow these tips!

  5. Rita P @ Digital Spikes 08/19/2013 at 5:19 am #

    Good post, It is very simple to pay of monthly and address errors in your report in timely fashion. I agree one must cancel dormant cards as it is not good to keep dormant unused cards. I don’t understand why people screw up their credit score as it is not complicated to keep it good. One just needs to follow simple tips. People complicated it to get it corrected.

  6. Skip Lahti 08/21/2013 at 6:34 am #

    Paul,

    The three credit agencies you listed in your article are for the UK. Here are the three major credit reporting agencies in the United States:

    TransUnion – http://www.transunion.com
    Experian – http://www.experian.com
    Equifax – http://www.equifax.com

    US citizens can also get a copy of their credit report from a number of different credit reporting websites as well as the government mandated http://www.annualcreditreport.com

  7. Michael 10/28/2013 at 4:44 pm #

    Good Post! But do not close out your credit card(s) once you have them paid off. This can actually hurt your credit score. I wrote a post on this very topic myself…you can read more about it here: http://www.michaelapearson.com/how-to-improve-your-credit-score/

Leave a Reply