10 Tips to Improve your Credit Score

TIPS TO IMPROVE YOUR CREDIT SCORE Whether you are applying for a mortgage, loan, credit card or even a mobile contract, your credit score will play a key part in determining whether or not you will be accepted. This infographic offers 10 easy tips to improve your credit score so you can open doors to better financial deals. THE AVERAGE UK CREDIT RATING 750? For a typical adult with some track record 750 / 1000 of borrowing, the average credit score is A credit rating of 750 is still better than 50% OF THE UK POPULATION. This is a HIGH OR LOW? 3-star rating HIGHER SCORE The majority of lenders see this as reasonable risk and are likely to lend money. LESS RISK TO THE LENDER 1. SIGN UP TO THE ELECTORAL ROLL MOVING HOUSE Lenders use the electoral roll to check you are who you say you are, so make sure it features on your credit report by signing up with your Local Authority. If you've moved house recently, you may not be on the electoral roll. The latest electoral roll figures (April 2011) show there were 8.5 million unregistered people in Great Britain. IF YOU'RE NOT ELIGIBLE TO VOTE of those nat on the register incorrectly 44% believed that they were registered. If you're a foreign national, send proof of your residency to all the credit reference agencies, such as Experian and Equifax, direct. 2. CORRECT MISTAKES ON 3. 3 GET AN ALIAS IF YOU'VE CHANGED YOUR SURNAME YOUR CREDIT REPORT A simple mistake can drastically change your credit rating. CHANGING NAMES "Worryingly, there are over 500 recorded cases a year in 163 which lenders have incorrectly recorded information on If you have changed your surname, and it is not linked to your old one, your credit people's credit files." Steve Rees, managing director of debt management company Vincent Bond & Co. Score could suffer. ACCESSING YOUR REPORT ONLINE MEANS IT IS LINKING YOUR ALIAS EASY TO READ AVAILABLE IN ACCESSIBLE It should be done automatically, but an alias can be linked to your credit report by contacting a credit reference agency such as Experian. REAL-TIME ANYWHERE If you disagree or don't recognise an entry, notify the credit reference agency and add a 'notice of correction' which lenders are obliged to consider when assessing your application. Adding your new name is FREE. 4. BREAK LINKS TO OTHERS 334 5. CANCEL DORMANT CREDIT CARDS WITH BAD CREDIT Financial links to others with a bad credit sScore will If uou have lots of credit cards that you don't use, this can make directly affect your rating. banks wary of you - even if you don't owe much on them. This may make them reluctant to lend more. One in five Brits have three or more credit cards in their wallet Examples include having a joint mortgage or credit card. If your partner has a poor credit score, it is a good idea to keep your finances completely separate. Cancel your account directly with your provider and don't forget to get the scissors out and cut your old cards up. 6. PLAY BY THE RULES DIRECT DEBIT To show lenders you're a responsible borrower, you must play by the rules The safest method to pay credit card bills is to set up a direct debit, preferably repaying the full amount each month. Alternatively, pay a set amount you know you can afford. Stick to your credit limits £500 LIMIT ALERTS Always pay what you owe by the agreed payment dates Having a calendar or setting up alerts on your phone will remind you when direct debits are due to come out of your bank account, so you won't get any nasty surprises and be PAYMENT DUE left short at the end of the month. 7. USE A CREDIT BUILDER CREDIT CARD You may find it hard to be accepted for a mainstream credit card if you've struggled with debts in the past, and your credit score has been affected. "Credit builder' credit cards are ideal if you need to build your credit score, or for people who 2 haven't used credit before. These cards come with a higher representative annual percentage rate (APR), but using the card responsibly and making sure you clear your balance every month is a great way to rebuild your score. 8. DON'T MAKE LOTS OF APPLICATIONS FOR CREDIT 9. 9 CHECK FOR HIDDEN DEBTS Every time you apply for credit, it leaves a footprint on your credit report which is visible to subsequent lenders Hidden debts are debts that you aren't aware of. conducting credit searches. EBT If you are declined many times, you may appear desperate and put off prospective lenders. These usually build up through recurring payments, or forgetting to cancel subscriptions or old accounts that are stuck in an overdraft. Spacing out your applications, checking why you've been turned down credit each time, and trying to improve your By checking your credit report, these hidden debts will be revealed, provided all of your contact details are credit score will make you more attractive to lenders. correct. 10. SHOW YOUR STABILITY Demonstrating that youare a solid and reliable borrower in the eyes if a lender is is one of the best 38. 60.0 ways to secure credit. CARD PAYMENT CARD PAYMENT BROUGHT FORWARD OAN 9-Jun 30-3un DIRECT DEBIT BANIS provides reassurance that you are going to pay on time. CARD PAYMENT MENT ECT DEBIT BANK LOAN STORE CARD DIRECT DEBIT YOU CAN DEMONSTRATE YOUR STABILITY IN A NUMBER OF WAYS 30-Jun 1-Jul SHOW YOU'VE LIVED AT ONE HAVE A LENGTHY RELATIONSHIP HAVE A SECURE JOB WHICH DEBIT BANK LOAN T BANK LOAN K LOAN ADDRESS FOR A LONG TIME STORE WITH ONE BANK YOU'VE BEEN IN FOR A LONG TIME By employing some or all of these tips, you should be well on your way to increasing your credit score. This will not only make it easier for you to secure credit, but it will also give you access to the best deals on the market, which will save you money. SOURCES Average UK credit score - www.checkmyfile.com Tricks to improve your credit score - www.moneysupermarket.com Great Britain's electoral registers 2011 [PDF] – www.electoralcommission.org.uk Don't let unused credit cards affect your credit rating - www.moneyvista.com TM MoneySupermarket com 10