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Eight Tips for Better Credit Score

There is a reason why our parents told us never to spend beyond our means credit can often spiral into an unruly mess. But today, more and more people opt for taking loans to meet their growing expenses. However, if you have things under control, you need not worry...

Firstly you’ll need to get a credit card if you do not have one already and start using it as this will demonstrate to lenders that you can handle and manage credit. Another way lenders like to know if you’re a responsible borrower is by checking that you are not overusing your credit card, ensure you keep a reasonable level of credit card limit utilisation.

Keep your credit applications limited as applying for too many accounts will have deferential effect on your credit score, this is true even for current accounts. Here, we define the best and easy tips to a better credit score

Get a credit card and use it

If you don’t have a credit card then you need to get one immediately. Using credit on a regular basis and making repayments on time will build your credit history over time. Keep your credit card active and aim to repay the card via a direct debit. This can also show mortgage lenders that you’re financially responsible and can be relied on to pay money back which you’ve borrowed.

Do not overuse your credit

Using credit is fine and you need to use credit to build a positive credit history. The key here is to not overuse your credit facilities. If you can use Rs 10000 of credit a month, try not to go over 50% of that limit. This shows mortgage lenders that although you could have used additional credit, you didn’t need to. Again, this creates credibility for lenders.

Check your credit report

You can download free copies of your credit report online from sites such as Experian and Equifax. It’s important to get a copy of your report so you can check that the information is accurate and up to date. When you apply for a mortgage, lenders will cross reference your information and if things do not match, then it can cause problems.

Register on the electoral rolls

Making sure you’re on the electoral register can make your mortgage application run smoother. It is also a great way to get credit in other financial areas such as credit cards and loans. Being registered on the electoral roll gives lenders more security as they can check your registered address. It is easy to do and can be done online in a matter of minutes.

Keep your credit applications limited

Don’t go over the top with applications for credit. It’s good to take a little credit and repay it as soon as you can but multiple applications for credit can have a negative impact. Multiple credit applications in a short amount of time can result in ‘hard footprints’. Hard footprints are left each time you apply for credit and can lower your credit score. If you are rejected for credit, do not be quick to apply again. Let some time pass before reapplying to try and minimise the chances of your credit score taking a hit.

Get an eligibility check

Checking to see if you’re eligible is a more sensible approach to credit. This is because an eligibility check does not result in a ‘hard footprint’ and will only leave a ‘soft footprint’ which has less of an impact on credit score. Eligibility checks can be great as they will show you if you are likely to be approved or not. Mortgage advisors can also check your circumstances to see if you may be eligible with certain lenders. This often results in a mortgage agreement in principle.

Be financially responsible

Paying your bills on time and repaying your creditors is probably obvious, but it had to be part of this list. If you miss payments or make late payments, then it will have a negative impact on your credit score. It’s highly advised to set up standing orders and direct debits where possible. This not only pays your bills on time, but can make your financial life a lot easier.

Are bills in your name?

If you have not yet got any bills in your name, then get some transferred over. Examples of bills could be household utility bills or council tax and mobile phone bills.The reason to get bills in your name is because it creates a record of paid payments and creates history. Making payments on time shows mortgage lenders that you’re financially responsible.

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