Improve how lenders perceive you as a potential customer by building yourself a better credit score.
You may not know the details of what your credit score is or how it’s calculated, but this three-digit number can have a monumental impact on how your future unfolds. How well you manage money and how future creditors analyse the risk of lending to you can alter everything from securing a mortgage to signing up for a new phone contract. A bad credit score can cost you money because it will put the best deals out of your reach. To prevent this, you can nurture your credit score. A good credit score is generally considered to be one of 720 or higher and different lenders will hold slightly different scores for you, depending on their credit reference agency and the specific information they look for when calculating scores.
Why is a high credit score better?
A higher credit score means you’ll be able to secure loans with good interest rates. As well as mortgages, a higher credit score will help you get better car finance and personal loans.
Essentially, the better your score, the more cash banks, building societies and other lenders will make available to you. That’s because they’ve seen your history of regular payments and they can trust you to manage your finances responsibly.
How can I boost my credit score?
Whenever you apply to borrow money (whether that’s as a loan, an overdraft, a credit card or car finance etc.) the lender will run a credit check against your name. This means that the lender, or the credit reference agency they use, is amalgamating all the financial data they have about you to decide if you’re a good bet. Those with very little borrowing history often have a low credit score, even if the borrowing they have done has been well-managed. So, sometimes simply building up your history a bit can help your score.
Other ways to improve your score include making sure you’re on the electoral roll and cancelling unused credit cards. You should also double check with the credit check agency that the data they hold on you is accurate. Also, stop applying for credit until your score is a little higher as every rejected finance application has a negative impact on your score.
Can I use an app to improve my credit score?
There are a number of free smartphone apps on the market to help people improve their credit rating. Some allow users to see exactly what elements of their finances are having a detrimental impact on their credit score.
What if I don’t look after my credit score?
A poor credit score is an expense. It will mean you’ll probably get the worst mortgage deals (if you get a deal at all), the highest insurance premiums on your car and home, the least attractive bank accounts and possibly the most extortionate interest rates on loans.
How well you look after your credit score can be a real deciding factor in so many areas of your life. The home you buy or rent, the car you drive, how much you pay for insurance, even who chooses to employ you – your credit score can make a difference to all of these. That’s why it’s vital to look after your rating and although it may seem complex, it’s simpler than you think and well worth the effort.