Mythbuster & I vol. 2 – Boost Your Credit Score Edition!

Okay, so last week I wrote a post about the biggest credit score myths out there. Now let’s put some more focus on Myth no. 6 – I can’t improve my credit score and how you can actually boost/repair your credit score.

Stay away from credit repair agencies

If you have been researching this topic for a while, you’ve probably stumbled upon some articles about credit repair agencies or their ads at some point. Frankly speaking, in most cases it’s just a waste of money – there are free debt counselling agencies in the UK such as Citizens Advice Bureau and Consumer Credit Counselling Service which can help you negotiate your settlement with the lender and sort out all of your debt problems.

The most important is to beware of the illegal agencies, some of whom suggest you lie in court about not receiving the County Court Judgement and try to negotiate a settlement with the lender before you receive the next CCJ. The last thing you need is a criminal record!!!

For more reading – go to Investopedia’s article on ‘Negotiating A Debt Settlement’

1. Sort out the defaults on your file

Before applying for a new credit, remember to sort out any defaults for previous credits. If you want to know how to do this, check out the Myth no.5 here

EDIT: Check out Savvy Scot’s comment below. Apparently, corrections on your credit report may do more harm than good! (Thanks J!)

2. Get a credit card

A reasonably (notice the bold and underline!) used credit card is a very good booster of credit history – so long as you maintain your card in a  reasonable (again!) manner. The never/always rule have to apply here which is:

NEVER miss out on the payments of your credit card and ALWAYS stay within your limit. 

If it’s going to be your first credit card, don’t get tempted by high limits offered – stay reasonable (yes, again!). You shouldn’t have a problem with paying off a card with a limit around 30-40% of your monthly income.

3. Never be late on your payments!

Yes, it’s as simple as that. You don’t have to repay your debts in full, but just keep track at least of the minimum repayment plan, if you can’t do anymore than that. To manage that easily, set up a standing order or direct debits for your payments.

4. Get on the electoral roll

Apparently, you are highly unlikely to get any credit in the UK without being listed on the electoral roll. To do that, visit the About My Vote website, fill out the paperwork and send the papers to your council.

5.  Applications timing might be crucial

Usually when people have their application rejected, they tend to apply for similar products with different providers. Try to avoid applying for a lot of credits in a short period of time – each single application is listed in your credit report. Too many applications at once can damage your credit score.

6. Cancel unused products

You have to remember that  the whole concept of credit-scoring relies on the idea of  ’predicting’ your behaviour whilst being in debt. If your prospective lender thinks that you have too much access to credit through your existing products, you may not get a new one. To avoid that, simply minimise the number of products you own which decrease your credit capability such as unused credit cards, debts or bank accounts.

7. Update the address on your current accounts

On some occasions, your application may get rejected because of an incorrect address on one of your existing products. Before applying for credit, check if the address on all of your products is up-to-date.

8. Prove your stability

It also may help if you can prove to your lender how stable your financial situation is in general. If you own a house, you’ve been with the same employer, bank or at the same address for quite a while, the provider may see you as an ordinary person, which is a good thing!

If you have any other tips, you want to share, please do so in the comment section!

In a bit,

C