7 Tips for Better Credit

26 Aug 2020


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Want to improve your credit and have more financial opportunities – then follow these tips.


 

1.         Delink Yourself from an Ex-Financial Partner

 

If you open a joint bank account or take out a joint mortgage, you find yourself “financially linked” to the individual that you have taken it out with. If the said person has a bad credit rating, it might affect yours too.

 

If you have split up with your wife/husband, partner, or the joint financial product that you had taken out is no longer between both of you, it can be a good idea to inform the credit reference bureaus of that disassociation. If you fail to do that, the other individual’s financial dealings may still end up impacting your credit score.


2.         Get on the Electoral Roll

 

If you are on the electoral roll, your chances of being accepted for credit will be significantly higher. That’s because credit reference agencies and prospective lenders will use this to check to ensure that you are exactly who you claim to be and live exactly where you claim to live.

 

Make sure that your credit record shows accurate address details. Living at the same address, being employed in the same job preferably with the same employer, and having the same bank account for a reasonable period of time should definitely also help.


3.         Cancel All Unused Credit Cards, Mobile Contracts, Direct Debits, and Store Cards

 

Lenders may consider the amount of credit that you have access to, along with the amount of debt that you owe. Cancel all credit accounts such as mobile contracts, store cards, credit cards, as well as accounts you no longer need or use.

 

It is not enough just to cut up the cards – it is equally important to get in touch with the provider and close the account. You will be asked to provide reasons why since they don’t want to lose you, so be ready to stick to your plan and close everything down.


4.         Avoid Missing Payments or Making Late Payments

 

Late and missed payments can remain on your credit file for up to 6 years. If you have made a late payment because of circumstances that were beyond your control, as long as you made a prompt payment after noticing, talk to the credit provider to find out whether this blot can be removed. It also applies to late payments for utility bills such as electricity or gas.


5.         Pay Off Your Debts

 

Pay off more than just the minimum allowed payment. It signifies good behavior to prospective lenders. To properly manage your debt, make sure that you are making progress into the repayment of what you borrowed.


6.         Use a Credit Card to Build Your Credit History

 

If you have never had credit previously, prospective lenders can find it difficult to assess you. You should think about taking out a credit card to build your credit, making several purchases on it every month, and repaying the balance in full at the end with a direct debit to build a good credit history. If you do that, it shows that you are capable or responsibly managing credit.


7.         Space Out Credit Applications

 

Credit reference agencies aren’t notified if you are rejected for credit, but a not is made whenever a lender makes a credit search.  Avoid using a scattergun approach when it comes to credit applications. The higher the number of credit searches conducted within a short time span, the lower your chances of being accepted for credit.

 

Space out your credit applications and, whenever possible, try finding out whether you are likely to be accepted before you make your application, use companies like Loanza to improve your chances of approval. Avoid applying for products unless you truly need/want them.


Start Improving Your Credit Now

 

Today, there are certain credit builder credit cards as well as bad credit loans designed to help you build your credit over time. The credit builder card has the benefit of no interest if you pay back your fill balance on time every month.

 

Bad credit loans, on the other hand, are for those with low credit scores or have little to no credit history. Such loans usually attract higher interest rates and have more restrictions than other loans. Still, they can be useful if properly managed.


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