7 Tips for Improving Your Credit Score and Financial Health

A higher credit score will benefit you financially in several ways. It can help boost your chances of being approved for the best financial products with the best interest rates, especially when applying for credit cards, loans, and mortgages. In addition, the better your credit score, the more likely you will be to get accepted for a range of credit lines including hire purchase products, vehicle finance, short-term loans, and even rental properties.

These days, borrowing money is often inevitable – even if you try to pay cash wherever possible. Larger purchases like a new house or even a new car might take years or even decades to save up for, so applying for finance that you can repay monthly is a sensible option to take. Unfortunately, a poor credit score can hold you back and while building up your credit rating can take time, all it might take is one error to bring it down substantially.

Whether your credit rating is poor and you want to improve it as much as possible, or you simply want to maintain your good credit rating and improve it if you can, there are several things that you can do to make sure that your credit score is the best it can be. Being responsible with money is the key to improving your credit score or maintaining a high rating. Keep these tips in mind.

Use Your Credit Card Little and Often:

Responsible, regular credit card use is key to building your credit score. Keep your credit card active by only using it for small transactions that you can easily pay off each month. This shows that you can reliably repay any money that you borrow and that you are sensible when it comes to utilising your credit card. A good way to do this is to use your credit card for purchases that you would be making anyway, like grocery shopping, household supplies, fuel, or new clothes when you need them. Doing this means that you will have the money available to repay the amount that you’ve spent each month without leaving yourself out of pocket.

Keep Credit Utilisation Low:

Your credit score will improve when potential brokers can see that you have credit available, but do not need to use all of it. When using a credit card, avoid maxing it out and instead keep the utilisation under around 30-50% of the limit. For example, if you have a credit limit of £1,000, don’t use more than £500 at any one time. Not only will this make managing and repaying your credit card easier, but it also proves to brokers that you are sensible when it comes to managing your credit. And, utilising a low amount of credit means that you will always have extra funds available on your credit card should you need them in the event of a financial emergency.

Correct Credit Report Mistakes:

Your credit score is calculated using the information that is held in your credit report. If this information is not accurate, for example, an account is listed as open when it is closed, or payment is listed as missed when it was made, then your credit score is not going to be accurate either. Mistakes in your credit report could mean that your credit score is lower than it should be. It’s important to regularly go over your credit report and check it so that you can quickly spot any mistakes and fix them, which will correct your credit score and potentially help boost it.

Get on the Electoral Roll:

Being on the electoral roll can improve the way in which brokers view you and can improve your chances of being accepted for credit in some cases. This is because when you are on the electoral roll, credit reference agencies are then able to verify who you are, which in turn helps to show brokers that you are financially stable and at a stable address. Registering for the electoral roll is a simple and easy process that you can do at the Gov.Uk website. If you are not sure whether or not you are already registered, your local authority can help you find out.

Use Eligibility Checkers:

Getting rejected for credit sucks, but it can also harm your credit score in the short-term. Instead of risking rejections by applying for credit blind, use an eligibility checker wherever possible to ensure that you are making informed decisions regarding which credit lines to apply for. An eligibility checker will perform a soft search on you before you apply and let you know your chances of being accepted for a certain loan, credit card or another form of a financial product. This means that brokers will be able to see some information about your credit history in order to help you determine which products are best for you, but it will not have an impact on your credit rating.

Avoid Making Multiple Credit Applications Over a Short Period:

If you need to borrow money it can be tempting to apply to as many brokers as possible and hope that one will say yes. However, each time you make an application for credit, a hard search is carried out on your account, and this is marked on your credit report. Making too many applications in a short space of time can have a negative impact, as it gives brokers the impression that you are desperate for credit. So, if you are rejected when you make an application for credit, avoid the temptation to try again somewhere else and wait a while before you try again.

Try Credit Building Products:

If your credit rating is low or you have never borrowed any money before, credit building products can be an ideal tool to use if you are sure that you can repay responsibly. New Horizons offers short term loans for people with poor credit that you can apply for online in a few simple steps. Short-term loan products are often ideal for building your credit rating as they do not require a long commitment and are often a small and manageable amount of money that you can repay in full or in instalments over a few months. New Horizons offer a variety of short term and credit building loan options that might be ideal for you.

Credit building credit cards are also a good option as these come with a small credit limit that can be increased over time as you improve your credit score by making regular repayments. A credit building credit card can be used to pay for regular expenses like groceries and paid off in full to help boost your credit score and make it easier for you to borrow money in the future.

Your credit score dictates a lot of financial decisions in your life, including buying a home, getting a loan for a new car, or even starting your own business. If you want to improve your credit score and keep it at the best it can be, be sure to keep these tips in mind and be responsible with any money that you borrow.