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How to Improve Your Credit Score and Get a Mortgage

Tue 11 Mar 2014

Improving your credit score is not about being passive – in fact the complete opposite – you have to be savvy to improve your score. People who are active in improving their credit score tend to have higher and better credit scores. There are a number of things that you can do to significantly improve your score very quickly and see a change in those vital numbers.

Using Credit

Credit scores are quite strange in that the more credit you use and the more you show that you can deal with it in a responsible manner, the higher it will be. In contrast, a person who never needs to use credit and can pay their own way may have a lower score than a person who regularly borrows and then pays back immediately. Your credit footprint is very important. Not using credit means you don’t tend to have a footprint, hence the lower score.

Debt

Although there is a reward in score terms for using debt, keeping the ratio of “debt used” to “debt available” low is essential – this is known as credit utilisation. So, to improve your score – here’s a piece of advice: pay off any credit you owe and reduce that balance. Improving your credit score by focusing on paying off your debt is a fast and easy way to have an impact on your score.

Credit Line Increase

A good way to improve the credit utilisation ratio is to ask your current credit card provider to increase the credit line on the current card you have. This increases the ratio of debt to credit and so improves your credit score. Do be aware though that this will hit your credit score temporarily for a few weeks, but in the longer term will help increase and improve it.

Direct Debit

We pay for a large number of things using money from our current accounts nowadays and chances are if you authorise transactions directly, then there’s a chance you’ll forget at some stage or another. However, by creating a direct debit you will lower the chance of missing a payment that could potentially lower your credit score and hit you later on when you go looking for a mortgage or loan.

Credit Card Use

It’s great having a few credit cards, but unless you use them, you won’t leave a mark on your credit card that can positively impact on your score. Use your card once a month to pay for something or other and then pay it off in full before the end of the month. This regular and responsible use will help you improve your rating quickly.

Check your Report

It’s not uncommon for the credit rating companies in the UK to make mistakes, so checking your credit report regularly will greatly help in finding out if any of these mistakes have crept onto your report. From issues regarding people who have the same names as you, to problems with people who used to live at the same address – there’s all sorts of mistakes that could be lowering your score. You can ask for these to be wiped if they’re wrong and this should help improve your score to the level it should be at.

A good credit score is vital for obtaining a mortgage and these few tips will go a long way to helping you do just that.

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