Credit Score Culture: Dealing With An Unhealthy Score

Credit Score Culture: Dealing With An Unhealthy Score

Whether you’ve just applied for a mortgage or a new phone contract and have been declined, then you are most probably feeling a little concerned. The chances are that the reason that your application for credit, whatever it may have been for, was declined was because of your credit score. When a company assesses each application for credit, one of the main tools they use to work out whether the applicant is suitable for credit is their credit score. This means that if you have a low credit score, the chances of being approved for credit are low.

Just because your credit score is low, that doesn’t mean that it will always be low. The fact is that improving your credit score is possible, so even if you have a really low score don’t let it get you down. What it’s important to remember is that your credit score signifies the risk that you are to a lender and whether you’re someone that the lender is likely to be paid back from. A low credit score suggests that you are less likely to pay borrowed money back, while a high credit score suggests that you will make your repayments on time, hence the importance of having a good score.  

When it comes to improving your credit score, there are some simple things that you can do to speed up the process.


Clear debts

One of the most important things that you can do when it comes to improving your credit score is clearing your debts. The fact is that when it comes to boosting your credit score, debts can impact it, so you need to get them cleared, or at least, clear most of them. Of course, for a lot of people, that’s easier said than done as clearing debts can often seem impossible, especially when they’re high, and you have very little spare each month. However, it is possible to get out of debt with Money Expert or the help of another specialist company and a solid debt management plan. Whether you got into debt while studying or due to bills, you can get out of it again. Yes, it will take time, but if you follow the steps suggested and cut your spending, make savings where you can, and put a small amount aside each month for your debts, you will soon be debt free.


Don’t go overdrawn

If there’s one thing that damages your credit score, it’s going overdrawn. Whenever you go overdrawn it has an impact on your credit score, even if you can’t notice the impact and your credit score doesn’t go down a number, it will have gone down point something of a number. So if you want to give your credit score the boost that it needs, it’s important that you don’t allow yourself to go overdrawn. Make sure that whenever you are using your card that you only use the amount of money that you know is on your card. It’s also important to ensure that when a bill is due to come out, there’s money in your account so that the bill doesn’t cause you to go overdrawn or so that it doesn’t bounce, another thing that impacts your credit score.


Pay half of credit cards off

When it comes to your credit cards, it can be tempting to max them out but don’t make the mistake of doing this. Instead, aim to only use half of the balance that is on each credit card that you have - ideally, that is no more than two credit cards. Don’t pay off your credit cards in full, just pay off half of the balance. If you want to boost your credit score, this is the perfect way to go about doing so - paying off half of the balance that your credit card has on it. So, for example, if you have a credit card with the amount of £1000 on it, you could use £500 and still see your credit score rise. The important thing to remember is always to keep your credit card balance at the halfway point, don’t make the mistake of paying it off in full, all you want to do is pay off half of it, and you will see your credit score rise.


Get on the electoral role

Something that can have a big impact on your credit score is not being on the electoral role. The reason for this is that when you’re not on the electoral role, it suggests that you move around a lot which impacts your credit score negatively. People who live at the same address for a long period of time tend to have a better credit score than people who move around a lot. If you’re not already registered on the electoral role now is the time to get your name on it so that you can watch your credit score rise.


Pay bills on time

Missing bills payments isn’t good for your credit score as often a default notice can be issued which stays on your credit score for six years and keeps it low. So aim to ensure that you always pay all bills on time. Otherwise, you will pay for it with a low credit score. If you’re worried about missing bill payments, your best bet is to set up direct debits for each payment so that as long as there is money in your account, the payment can’t be missed. Get into a habit of paying your bills on time and in full, and you will notice that your credit score starts to rise.

When it comes to improving your credit score, the important thing is that you are responsible with your money. A credit score shows how likely you are to pay back the money you owe, which is why paying bills on time, keeping your credit cards in check, and not going overdrawn is so important when it comes to improving your credit score. It will take time for your score to go up, but if you take note of the tips above, you will soon see your credit score rising.

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