James and I are saving to buy a house and also trying to improve our credit scores to increase our chances of being accepted for a mortgage. There are loads of things you can do to try to improve your credit score. These are my top tips and what we are doing to lead us to our forever home.
Get on the Electoral Roll
This is so important as it helps banks and lenders to check your identity and address by looking at the electoral roll. It increases your chances of being accepted for credit as you are easier to formally identify. Just ensure that all the details you give are correct.
Don’t go over your credit limit and keep your balance low
Try not to lend more than you have been accepted for as you are then breaking your credit agreement with that company. When you go through credit checks lenders can see what your limit and your balance is. I know for example credit card companies like the balance to stay around 30% of your limit. If you are at your credit limit or close the lender may be reluctant to offer you credit as they may think you are living off your credit card/overdraft.
Don’t apply for loads of credit at the same time
Banks and lenders do not like seeing multiple applications for credit and this actually makes your credit score go down every time you are declined. You may be seen as desperate for credit , therefore may be a risk. Lenders may also suspect fraud if loads of applications are made in a short space of time.
Build your credit up
Banks and lenders need to see that you have had credit in order for them to assess how much of a risk you are. They want to see if you have had credit before and paid it off or have had late payments. This can be done using various methods for example you could get a credit card and buy a couple of things each month and pay it off in full or pay off a percentage over the suggested amount. If you are having difficulty getting a credit card or loan as you are rebuilding your credit you could try a loan for bad credit and take out a small amount and pay it back at the end of the month in full.
Don’t miss payments or pay after the agreed date
This can drastically affect your credit score and prevent you from getting future credit. A late payment can stay on your credit file anywhere up to six years. You should always make contact with the lender if you are in any financial difficulty as they can sometimes come to an agreement before it spirals out of control. Also ensure that you haven’t got any CCJ’s as this can also majorly affect your credit score and also stay on file for 6 years.
Check that you are not linked to someone financially
This can also affect your credit score if the person you are associated to has bad credit. For example if you have a joint account or credit account with your partner and they have bad credit this could lower your score. You can easily disassociate yourself financially by being taken off the credit account or shutting joint accounts down.