The Scottish Mail on Sunday
Five ways to boost your credit score
HALF of all borrowers applying for a mortgage, new credit card or loan have never checked their credit file or credit score. This is despite the fact that any issues in their credit history or mistakes recorded against their name could mean they are turned down for a loan.
Checking that a credit file is accurate – and boosting a personal credit score – are vital keys to smoothing the path to borrowing. The Mail on Sunday explains how to improve a credit score and correct errors held on a file to help ensure future borrowing is approved.
REGISTER on the electoral roll. This is the best way for lenders to accurately identify you and rule out fraudulent loan applications made in your name. It also boosts creditworthiness in the eyes of financial companies. It takes just five minutes to do at gov.uk/register-to-vote.
USE credit sensibly. Three main credit reference agencies – Experian, Callcredit and Equifax – record data on loan and utility payments made, or missed, by customers.
Their files are open to would-be lenders such as banks and credit card companies before they make a decision to lend. Some also provide a credit score, usually between zero and 999.
Consumers without a credit card or a loan often have a low credit score. This is because lenders need to see evidence of good debt management. Take out a credit card and make repayments on time to help build a good picture of your credit worthiness.
KEEP your home phone. In the age of mobile phones many households have disposed of their landlines, but a home phone often signals financial stability, particularly if you have lived at the same address for a number of years.
CLOSE old credit or bank accounts. If you have credit cards which you no longer use contact the provider and close them. If an account is still open – even if there is no balance on the card – lenders may think you already have access to more credit than you need as there will be a credit limit on the unused cards. RESIST applying for extra credit. If your credit score is low or you have had payment problems in the past do not apply for further cards or loans. A rejection for credit will show up like a red flag on your credit file and can affect your ability to borrow in the future.
Concentrate on clearing existing balances and making repayments on time to restore a score before making new credit applications.