5 tips to help improve your credit rating

If you’ve ever tried to get a mortgage or even a loan, then you’re probably roughly aware of what your credit rating is and what it can mean for you. Many of us would love to improve our credit rating so that we have access to better deals. But improving your score can feel like an uphill struggle with lots of conflicting and confusing advice online. However, there are some really simple things you can do to improve your credit rating and I’ve got five of them here.

1. Know your score before applying for a loan

When you consider that your credit rating has such a knock on effect on your borrowing, it’s hard to believe that over 55% of British adults don’t check their score and eligibility before applying for a mortgage, loan or credit card. This can result in an application being rejected. Not only can this harm your ego, but it’s also having an impact on your credit score. Just applying for a new loan means that a hard search is recorded on your credit file. Applying for multiple products can have a really detrimental effect on your credit score.

If you know what your credit score is, then you will have a good idea of the types of products you’re likely to be accepted for. Being rejected because you haven’t done your research means you’ll have to apply again to another provider and this doesn’t look good.

2. Pay your bills on time

It’s such a simple thing, but paying your bills late or missing a payment can have a big impact on your credit rating. If you can, set up direct debits so that your bills are paid automatically without you having to manually do it.  In my experience, life gets in the way and we easily forget that the council tax is due on the 1st of every month. Having a direct debit set up means that making payment is one less thing to remember.

Keep a record of all of the bills you have coming out each month and make sure that there’s enough money in the bank to cover it. It’s a good idea to update your list regularly as payments change.

3. Clear existing debts

It’s never a good idea to have lots of debts, but life has a way of throwing a spanner in the works when you least expect it and so many of us have to take out loans that we hadn’t planned for. Taking out a loan with a provider such as CashLady is a way that many people cope with unexpected bills when they don’t have the funds otherwise available.

Once you’ve taken out a loan, try to avoid applying for other credit products until you’ve cleared it. Having multiple open loans can reflect badly on your credit score.

4. Avoid moving around if you can

Moving from address to address can actually raise a warning flag and it may have a negative impact on your credit score. I know it’s not always possible, but keeping the same address does help to keep your credit rating more stable too.

5. Check for mistakes on your file

You’d be surprised at how many people find a mistake on their credit file. Earlier this year, it was believed that a staggering 10 million people found errors on their credit reports. This can have a huge impact on your life. Think about finding out you’ve been refused a mortgage because of an error, how devastating must that be! So, make sure that you check your report regularly for anything that doesn’t add up.