Credit Tips for Better Credit
Here are some Credit Tips for better credit! Did you know that your credit history might be making it harder for you to get credit? If you’re struggling to get credit, we have some top tips on how you could make your credit file healthier. It might be more straightforward than you think…
Are you registered to vote?
It might seem like voting and money are unconnected but being on the electoral role is one of the simplest ways to improve your credit score. The electoral role is important to lenders as it proves that both your identity and your address are correct. Registering is simple and it doesn’t take long. Simply visit the government website and sign up. It’s free but remember to keep your details updated if you move house.
Is someone’s bad credit history is affecting yours? Here’s what to do
You could be right – it depends on what decisions you have taken in the past. If you signed up for a joint credit agreement with another person, it could impact your credit score. It doesn’t even matter if the loan agreement has ended; their credit score could be affecting yours. If you have ever taken a joint loan out with someone – a relative, a former partner or housemate – their financial behaviour is still linked to yours. A lender will look at your credit history and take the other person on the joint loan’s credit history into account. Their poor credit history could mean that you score poorly on your own credit score -but there are actions that you can take to separate yourself from them. You must request a ‘notice of disassociation’. To do this you must write to all three of the UK’s major credit agencies – Equifax, Experian, Transunion – to start the process. It is important to note that the loan agreements either be at an end or the agreements be transferred to one of the individually-named borrowers named on the joint loan agreement.
Up to date? Are your accounts registered to your current address?
Moving house brings with it a lot of admin and making sure that you have updated all your current credit agreements with your new address has to be one of the most important. If you forget to do this or if it doesn’t seem like a priority, it can cause bigger problems on down the line. Lenders will search your credit history and scrutinise every anomaly. An address that doesn’t match the details you’ve supplied could be flagged as an issue with identity, which could have a serious impact on your ability to secure credit. Add this task to your list of important must-dos when it comes to moving home – like telling the DVLA if you have a driving licence or updating your passport. You may also want to check with the three major UK credit agencies that there are no old addressed connected to your account.
Understand how a credit search works – what’s a hard search and a soft search?
Every time you apply for credit, a lender will search your credit history and look at your credit score. They may undertake a hard search or a soft search. A hard search means that other lenders can see that a search has been conducted. Too many hard searches won’t look good on your record and could even impact your chances of getting credit. A soft search leaves no trace – it is usually the type of search carried out by eligibility checkers. Only you can see a soft search. You can ask that a lender only carry out a soft search, although it is up to them to decide what type of search they will use.
Got a payday loan?
Some lenders take issue with payday loans and will not offer you credit if you have had a payday loan. These lenders consider payday loans as a sign of financial instability. You may have a payday loan on your file that you did not realise was actually a payday loan. If this is the case and you have been mis-sold a payday loan, you can seek to have it removed from your credit history.
Have you got lots of unused credit?
If you have lots of lines of credit that you are not currently using, it could actually count against you. If you have lots of credit cards or store cards that you don’t use, then you should consider closing some of them. You might want to keep the cards that have a good history of repayment and get rid of the ones that you simply don’t use. A good measure for the amount of used credit you should have is between 20% and 30% of the total credit available to you.
Is your credit maxed out?
Getting close to your credit limit? If there’s not a lot of credit left, then this could negatively impact your credit score. Potential lenders might take this as evidence that you are in financial difficulty and should not be afforded a new line of credit. If you want to take out a new card or ask for a new loan or mortgage, you should work on paying off some of your existing debt first.
Check your credit file for mistakes
It can happen – credit files can incur errors as a result of an admin error or information supplied by a third party or a lender. The mistake might be small and simple but it could have a massive impact on your ability to get the credit you need. It can be well worth taking the time to look at your credit report – if you see something that’s not right, you can ask a lender to fix the error. If they don’t or won’t, you can make a notice of correction yourself or ask the Financial Ombudsman for support.
Keep an eye out for fraud
Checking your credit record could throw up more than a wrong address or an admin error. You should take a good look at your credit history to match accounts and loans that you have taken out. If you see any accounts that you don’t remember opening or did not open, or if you see anything else unusual on your account, you may have spotted some fraudulent activity. If you do see something that you’re unsure about, please contact the lender straight away.
Pay attention to your credit file
After all, it is your credit history. Credit scores do go up and down but it could pay to take a look every now and then to make sure it is as you anticipate it should be. You can check your file to ensure it is correct and up to date – it’s good to do this before you apply for a new line of credit as you may be able to address something that would have impacted your application negatively.
Checking your credit score is simple with the UK’s three main credit agencies and you will be able to see how you score against their different credit ratings scores. All three agencies use a different way of calculating your score so look at the file rather than comparing numbers between agencies.