Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
Improve your credit score today
Here are some really easy wins to start improving your credit score today:
1. Make your loan repayments on time
Direct lenders want to see that you can and do make your loan repayments in full and in time. This way lenders can see that you are a reliable person and able to handle your finances reliably. Close down any unused bank account and stop any credit cards or store cards which you do not use, read this article about unused credit cards and the effect they will have on your credit score.
2. Reduce your number of credit applications
By reducing the number of times you apply for credit means fewer hard credit checks showing up on your credit score. When you apply for credit a lender will perform a hard credit check on your credit score and if they see that there have been lots of hard credit searches could signal to a lender that you are in financial trouble and are unable to manage your finances correctly, you want to minimise the number of credit applications to no more than one every three to four months, what is a credit check
3. Work on building you credit history
If you have never taken out a loan or had any store cards or credit cards it can be difficult for a lender to have an accurate picture of your financial standing, this is not uncommon for young people who have never taken out any credit. Here are some steps you can take to build your credit history
4. Do not max out your credit
If you have credit cards it is a good idea to stay within the 50% rule, meaning try not to exceed more than 50% of your credit limit, therefore if you have a credit limit of £1000 on a credit card do not use more than £500 on that card, lower percentages are a sign to lenders that you can manage your finances, the lower the percentage the better as far as your credit score is concerned and make sure you pay off your credit cards in full each month.
5. Get onto the electoral register
Even if you don’t fancy voting get yourself onto the electoral register, even if you are living with parents or in shared accommodation, this will help direct lenders establish with more certainty that you are somewhat stable when it comes to residency
What is the advantage of improving my credit score
So why should I improve my credit score?
The answer is simple, if you want to apply for a short term loan you must prove to any lender that you have history of being financially responsible and they can do this by looking at your credit report which is a record of credit history, they can see if they have lent to you previously .
Although bear in mind that each lender will have their own criteria in determining and calculating your credit score and the level of risk which you present.
Get a free Experian credit score, you can check this without affecting your credit score.
Having a higher credit score reassures lenders and any company offering credit that you are less of a risk that someone with bad credit score. People with a higher credit score are rewarded with various benefits such as:
1. Higher Credit limits
You will have the ability to borrow more wen applying for a short term loan with a higher credit score
2. More attractive offers
You will have access to more attractive offers when applying for payday loans, car loans, mortgages and credit cards.
3. Lower Interest rates
A higher credit score will indicate to lenders that you are a lower risk and may offer you more competitive payday loan interest rates leading to cheaper borrowing.
How long does it take to improve your credit score?
Improving your credit score is not an overnight change, it can take a little while, but the sooner you start to implement these changes you improve your chances later on. You ought to start seeing changes to your credit score after 3 to 6 months as updating your credit report with the changes you make can take a little time.
It depends on a number of things, but you should know it won’t happen overnight. Information about things like your new bank account or credit card can take up to three months to reach us, so it may take at least this long to see real improvements to your score.