Considering how important your credit rating is to your overall financial health, it’s shocking that more people aren’t talking about this vital statistic. Your credit rating dictates everything from how easy it is to take out a loan all the way through to your chances of being able to buy a house or a vehicle, so it stands to reason that you should know it and be aware of it at all times. Even still, many people don’t know what their credit rating is or how they can boost it to make their financial lives easier – whether it is to fund a vacation, car, or other commitments. Here’s how you can boost your credit rating and give yourself a smoother ride when it comes to your personal finances.
Get on the electoral register
This is such a simple way to improve your credit rating that it’s amazing it even works, but it absolutely does. Putting yourself on the electoral register if you’re not there already has a hugely positive effect on your credit rating. It helps lenders to know that you are who you say you are and that you aren’t going to run out on loans, so if you’re not on the register, contact the government and ask to be put on it as soon as possible. You should see a pretty swift improvement in your credit rating!
Take out loans (surprisingly!)
If you have a negative credit rating but you now find yourself in better financial circumstances than you were when your credit rating dropped, then taking out loans can actually help you to recover. Lenders can see that you make repayments regularly if you have an active loan, but if you don’t, then you’re effectively an unknown to them. Don’t worry if you think your credit rating is too poor to take out a loan; simply take a look at the very bad credit loans direct lenders provide and you’ll see that you have options.
Make loan repayments promptly
It might sound obvious, but if you want to improve your credit rating, you’ll need to make loan repayments promptly. The longer you let loan repayments build up and overlap, the more your credit rating will suffer. Try to make sure that as soon as you take out a loan, you have a solid repayment plan in place that will help you to pay it back. Follow that repayment plan, and if you absolutely can’t, make sure to talk to your lender and try to negotiate something different if possible. Just don’t let the payments accumulate unaddressed.
Stay on top of bills
Believe it or not, lenders will view your bills as a kind of loan repayment, so you need to make sure you’re keeping on top of bill payments. If you need to, create a budget for yourself so that you know exactly how much to assign to bill repayment. The important thing, just like with loan repayments, is not to let your bills pile up; if you allow this to happen, then the situation will quickly compound itself and get worse, so try to be savvy when it comes to making bill payments.
Get a credit builder card or loan
There are cards and loans out there that are specifically designed to help you rebuild your credit. These cards don’t actually give you a balance to spend right away; rather, they simply allow you to “make repayments” on them so that you can show lenders you’re making payments on something, and the balance is released to you at the end of the loan contract. Since they’re specifically designed for the purpose, these cards and loans are great ways to build credit confidence.
Use credit as little as possible
While it’s true that you should be making regular credit repayments, you should also ensure that you’re using credit as little as possible. It might seem paradoxical, but if lenders see that you don’t need to utilise credit frequently, they may be better disposed towards giving you a loan or granting credit to you. Even a credit utilisation ratio of 5% could be damaging your financial health in the long term, so think very carefully about whether you need to use your credit card or not.
Sometimes, your credit score can suffer for what seems like a small and inconsequential reason, but that reason can have serious knock-on effects. If there are mistakes on your record – if an incorrect payment or loan is logged on the score, for example – then it can cause your credit rating to take an unnecessary nosedive. Be sure to contact companies to rectify mistakes and make sure your record is as clean as possible, because that will help you stay in the black.
Break financial links with others who have poor credit
It might be time to have a difficult conversation with a partner or family member. If you’ve got a joint account with someone, and that person doesn’t have the best credit score, that can unfortunately reflect poorly on you. Breaking financial ties with that person could help your credit score immensely. Make sure to talk to that person in order to find the best course of action, even if that course of action might be emotionally hard for both of you.