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Our credit scores play a huge role in our everyday lives and can be a deciding factor in many of them. A higher or lower credit score might decide what kind of house you can afford to live in, or what kind of car you can drive, so it pays to keep yours in a healthy state. Here are a few tips on how to maintain or improve your credit rating.
Pay bills on time
Mortgages or rent, energy bills, mobile phone contracts – it’s really important to keep on top of all these if you want to keep your credit score in healthy shape. Defaulting on any kind of regular payment will end up on your credit report. Do it too many times and lenders won’t see you as a reliable customer when you come to make future credit applications.
Set up regular direct debits to cover all your major bills and match the payment dates up with your payday loan from work so you’re never short. This way, the bills will almost pay themselves and you can enjoy a boost on your credit report as a result.
Keep credit balances low
If you have a credit card or an overdraft, don’t be tempted to reach the upper limits of them to finance a flashy purchase that you might want but not necessarily need. Credit utilization is another key factor that lenders look to, with 30% often suggested as the benchmark that you should try to avoid going over.
Keeping your utilization low shows lenders you can act responsibly when you have access to lines of credit and can help you secure better rates on products such as personal and business loans or to get a mortgage in the future.
Use credit – sensibly
You may have a lower credit limit due to having not used much credit in the past – whether due to banking choices or down to age. Sensibly using credit can lift your score over a long-term period. For example, taking out a credit card and using it to make purchases you can quickly clear using your personal finances.
If you haven’t utilized much credit in the past, you might also find other products such as bad credit car finance that can help you access purchases that traditional lenders might unfairly exclude you from.
Monitor your credit report regularly
You might think that getting your hands on your credit report is a laborious process – actually, it’s really easy and you can do it for free! Checking your report is crucial because it allows you to spot any errors and fix them so that lenders have the most accurate picture of who you are.