Easy ways to improve your credit score
Did you know that your credit score can affect whether or not you’ll be offered a home loan as well as the interest rate you’ll be offered? If you’re in the market for property and your credit score isn’t as high as you were hoping, the good news is that’s there’s plenty you can do to improve it.
The first step towards boosting your credit score is understanding how it’s calculated. Credit bureau Experian explains that, “Most scoring models take into account your payment history on loans and credit cards, how much revolving credit you regularly use, how long you’ve had accounts open, the types of accounts you have and how often you apply for new credit.”
With that in mind, here’s a look at several strategies you can put in place to improve your score.
Strategy 1: Pay your accounts on time
This is possibly the most important move you can make when it comes to improving your score. These accounts can include everything from your credit card and car and student loans to rent and utility bills. If you’re struggling to meet your monthly payments as a result of the COVID-19 crisis, it’s worth approaching your creditors to chat about possible payment options so that your credit score remains intact.
Strategy 2: Don’t use all your available credit
Your credit utilisation ratio – the amount of credit you have versus how much of that credit you’ve used – is another critical factor affecting your credit score as it’s a good indicator of how well you manage your credit. Keeping your credit utilisation ratio below 30% is ideal if you’re looking to improve your credit score.
Strategy 3: Don’t apply for too much credit
Each time you apply for a new line of credit, whether that be a credit or store card or a loan, a hard enquiry is created on your credit report and remains there for up to two years. Attract too many of these and your credit score may take a knock.
Strategy 4: Keep your credit report clean
It’s important to check your credit report regularly as any incorrect information could impact your credit score negatively. If you do come across any inaccuracies on your report, dispute them immediately by contacting the credit bureau that’s issued the credit report.
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