Monday 28 October 2019

How To Build A Good Credit Score

When I first started at looking into buying my own property, I will admit that I panicked. My credit score has never been the best, mainly because I never had any credit to my name. The most I had were a couple of store cards; I never had a bank overdraft, a credit card, or even a loan.

I never realised that not taking out any type of credit could have a negative impact on your credit rating, so I began looking into different ways in which I could help build a good credit score for myself.
Register to Vote
This is something that I never knew had an impact on your credit score. I was registered to vote under my maiden name which still had not linked up to my new married name. Once this was amended, it didn't take long to take affect and I noticed a positive change in my credit score.
Start creating a good credit history
There are many ways in which this can be done. My first step was taking out a credit card of which I paid off in full every month. It doesn't have to be hundreds of pounds each month; I filled my car tank with fuel and paid it off a week later. Every little helps when it comes to your credit history.
However, initially I wasn't able to apply for a credit card due to my lack of credit history. In order to help start this up I looked into short term loans that I knew I could afford to pay back. I found that CashLady offered pay day loans which were perfect for people who had a poor or lack of credit history to help them out when needed. Provided that it is paid back on time, then there is no need to worry.
Keep credit utilisation low
This is something I hadn't heard about before and now I am so glad that I have found out about it. Credit utilisation is the percentage you use of your credit limit. So, for example, if you have a £3,000 limit on your credit card and you spend £1,500, then your credit utilisation is 50%. Most of the time, a lower credit utilisation is seen favourably by companies which can increase your credit score. Where possible, try and keep your utilisation score at 25%. As soon as I started doing this with my store card I noticed a difference within a few months.
Pay on time
This goes without saying really doesn't it? Make sure that you are paying everything you owe on time and if possible, in full. This will show lenders that you are reliable and able to handle credit responsibly.
Doing things on a budget definitely helped me to stop overspending, which in turn, helped my credit rating. With Christmas coming up, this tip alone can help most people! I also always make online purchases through TopCashback to save some extra pennies and scour VoucherCodes too! Whilst they don't make an impact on your credit rating, they definitely help with saving.

All of these little tips helped me out considerably to build a great credit score which eventually enable me to secure a mortgage.
I would love to hear some other tips that you may have!

*Disclosure - this is a collaborative post with CashLady*

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