Want to improve your credit score? Over high interest rates on loans and credit cards? Tired of having your credit applications denied?
From fixing a bad credit score to peaking your credit score, we’re going provide you with the tips and tricks you need to know to reach your financial goals.
Step 1: Know your credit rating
Knowing your credit rating is the first step to better financial management and to improving your current score. Even if you know that you have a poor credit history because you’ve been denied credit or received a higher than expected interest rate, you still need to obtain a copy of your credit file to examine your current position in detail.
There are three credit reporting agencies in the UK, and you can obtain a free copy of your credit file from either of them by making an application directly on their websites. Alternatively you can use a service such as CheckMyFile which is a service that will obtain a copy of your credit report from all three agencies on your behalf.
The UK’s 3 credit reporting agencies:
These credit agencies essentially gather a range of information on consumers which includes your spending and debt repayment history as well as other information such as defaults and judgments against your name.
Lenders and other service providers, with your permission will then run a credit check on your name to establish if you are creditworthy and if so, what rate to assign to you when lending you money.
Step 2: Set financial goals & create a budget
Once you’ve obtained a copy of your credit file from one of the 3 credit agencies, it’s time to set some financial goals. One of these goals could be as simple as increasing your credit score from poor to good or even from good to excellent.
This goal can be combined with other financial goals such as paying off your credit card, saving money for a specific purpose such as putting down a deposit on a home loan or even avoiding credit for a set period of time.
The next step is to create a budget that reflects your financial goals and is conducive to improving your credit score and maintaining healthy financial habits. There are many online resources that will assist your in developing and sticking to a budget.
As a general rule, you should create a debt repayment strategy that will ensures you prioritise debts and pay them off in a way that is conducive to improving your credit score. There are multiple debt repayment strategies that you can use to do this including the avalanche and snowball methods.
Simple tips & budgeting skill can help you get rid of bad credit
It is important to always make payments on time. If you feel like you are beyond improving your credit score and you feel like debt is getting the better of you then it might be time to consider debt consolidation.
A debt consolidation loan will consolidate your debt into one affordable monthly repayment. As soon as your debt has been paid off you will be cleared of your bad credit score. Now it will be much easier for you to build a good credit score.
In addition to maintaining all of your debt repayments, you must avoid taking out further credit unless you have minimal or no debts and are going to use this technique to establish a credit history.
Step 3: Use debt to build credit
One of the best ways to ensure that you build your credit is to obtain a loan or a credit card. This sounds counter-intuitive, but if you want to make sure you have a great credit score you need debt. You need to ensure that you take out a loan, get a cell phone contact or even a clothing account. The trick is to stick to your payment deadlines and don’t miss a payment.
Debt repayment builds up your credit score
When you pay your bills, quick loans, and other accounts on time it will have a positive impact on your credit score. Improving your credit score has many benefits; you can get better deals on loans, lower rental rates as well as discounts on holidays and shopping. Having a bad credit history can be a pain, as you may be denied credit or have to settle for higher interest rates.
Credit cards can save your credit history
Getting a credit card is one of the easiest ways to improve your credit score. When a credit card payment is paid on time for a longer period of time it can drastically change your credit score. Improving your credit score with a credit card can give you lower interest rates on your loans. A life-saving cycle if you have the budgeting skills to make it possible.
Credit cards can get you better rates on loans
If you have a credit card that you are not currently using and the payments are up to date, do not close your credit card. This serves as a great track record of paying your credit card off. Also remember that cancelling multiple loans and credit cards at once will negatively affect your credit so you should avoid this at all costs.
You can go to the same bank where you have that credit card and get better rates on loans. It will also be easier and quicker for you to be approved for a loan because they already have evidence of your repayment history.
You CAN fix your bad credit score!
These days a bad credit score isn’t the end of the world, there are many tips and tricks to help you improve your credit score. It might also be worth it to learn new budgeting and financial skills.
Debt review and debt counselling can also help you get back your financial freedom as well as stay out of debt for good. A good credit score is within your grasp.
Improve your credit score today! Compare loans and credit cards to find the most affordable deals to get started on your credit repair history.