7 Tips to avoid burnout whilst working from home
27 Jul 2021 • 4 min read
For some, a credit score is kind of like your appendix, you know it’s there but you don't really know what it does…
Knowing how to build your credit score is important if you want to improve your chances of getting approved for credit.
In the UK there are three main Credit Reference Agencies (CRA): Experian, Equifax, and TransUnion (formerly Callcredit). These agencies create, keep and hold our credit files and provide credit information to prospective lenders, landlords or employers upon request, to help them verify your identity, or determine how risky you are as a borrower.
It’s safe to say that your credit score is vital to your financial health, so it’s important to take care of it. Here are some of the ways I try to maintain and improve my credit score:
Paying your accounts on time and in full each month is a good way to show lenders you’re a reliable borrower, and capable of handling credit responsibly. Any late payments will be recorded on your credit report and will signify that you may not be a reliable lender.
A creditor can report your late payment to the credit bureaus such as Experian, Equifax, and TransUnion once you're 30 days behind, and the late payment can remain on your credit reports for up to seven years!
Ways I try to eliminate missed payments is by setting up a debit card so that I don’t have to worry about forgetting payments, and having a budget in place so that I won’t be strapped for cash when it comes time to make those payments.
Ideally, you should only spend as much as you can afford to pay back on your credit card to avoid accumulating debt beyond your means. Therefore, I only use my credit card on things I absolutely know I can afford. I also try to keep my credit utilisation ratio as low as possible, as it suggests to lenders that you are responsible with managing your money.
Not only will this reduce your debt faster but it could also show prospective lenders how reliable you are, so I always aim to pay back the full amount!
I tend to not apply for credit too often, especially within a short period of time. Multiple lenders carrying out credit searches at the same time can affect your credit score which could make rejection to credit more likely. This is because applying for multiple applications in a short period of time may indicate to lenders that you are struggling for cash.
If you’re on the electoral roll, it allows lenders to verify who you are and where you’re living. This also means you’re a less risky borrower, because this information helps to rule out the possibility of fraud, and it also suggests you are stable where you are living. Moving house too often could make you look less stable, which might discourage some lenders from giving you credit.
To maintain my credit score, I like to always be on top of checking it often. This helps to make sure your score isn’t being affected by errors or fraud as the sooner they can be spotted and corrected, the better.
The steps you take to boost your credit rating don’t have to be tackled alone. Speak to your lender about your situation if you feel you’re struggling to keep up with credit card repayments or if you’re having other financial difficulties. They may be able to help you get back on track with suggestions like changing due dates and taking the trouble out of remembering when to make repayments by setting up a Direct Debit. Just remember a direct debit will only help if you have enough money in your account.
These are the ways I try to maintain and improve my credit score. Whilst the road to building your credit score may be a long one, it’s surely important!
The following is for general information and is not intended as a form of financial advice by finndon or it’s representatives, nor the information intended to be relied upon by individuals in making any financial decisions.
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