If you wish to apply for any type of financing such as a loan or credit card, it is important that you have a decent credit score. If your credit rating is poor, it is likely that you will be refused financing or you will have to pay a very high-interest rate because the lending company will consider you to be a bad risk.
Before you apply for any type of loan you should make sure that your credit score is as good as it can possibly be, and improving your score could potentially save you thousands of pounds when applying for new credit. Fortunately, there are a number of ways that you can raise your credit score fairly quickly.
Firstly, you should eliminate as much debt as possible. This improves your debt to income ratio which is a big factor on your credit rating. However, although you should pay off as much existing debt as possible, you should be careful to keep the line of credit open – so if you have a credit card with £500 worth of debt, it is a good idea to pay that off but not to close the card. This is because when you apply for financing, the lenders will look at how much credit is available to you; the more you have the more likely they will be to give you a loan at a good rate.
If you are in debt it is also a good idea to get credit counseling. A credit counselor will advise you on how to manage your monthly repayments and they will also deal with your creditors who are hassling you for repayments, although you will have to pay them a small fee. For more information, visit https://www.thedebtline.co.uk.
Another way to improve your credit rating is to pay your monthly repayments on time. Not doing so is very damaging to your score. You should also get rid of any expenses that you have that are not entirely necessary. You may need to make a note of everything you spend to determine if you are spending money regularly on unnecessary items.
Instead of relying on your credit cards all the time, change your habits and pay with cash. Having credit card debt is not a good way to get a good credit score, and if you get in the habit of only buying things when you have the cash in your pocket you are spending money that you have rather than continuously spending money that you haven’t earned yet.
It is also a good idea to check your credit report. Around 60% of all people find that there is an error on their report that needs to be fixed. Removing errors from your report can increase your credit score and so you should check your report released two or three times a year.