How to fix your credit score

 

Your credit file is a big determining factor for lenders when it comes to deciding if they will lend to you and much, they’ll lend you. The stronger your score the more lenders out there that will accept you. The more lenders you qualify with the more options you have when it comes to picking the best mortgage product out there that fills your needs. 

 

Your credit history is a window into your future when lenders come to view your application. How you have managed money in the past is a decent indicator of how you will manage a larger sum of money i.e., a mortgage in the future. Mortgage applications are fairly black and white in terms of the the evidence they require to help them make a decision. All information must be supported with documents, so a credit report is their only way of seeing your credit file and credit history. 

 

If you have a strong credit file and high score great! You are in a great position for a mortgage application, but what if your score isn't the best? Or your score isn't what you expected? 

 

First of all we need to know what it is that impacts your credit score, here are the main factors that make up your credit score: 

 

The electoral roll – Another name for the address you are registered to vote. The electoral roll is the only register the lenders have access to that shows where you live and have lived in the past. Any credit agreements you have taken out in the past or have currently are registered to a particular address. So, when a lender runs a credit check on you, they will check the addresses you have lived at to see what credit you had and how you have managed it. 

 

If you are not registered on the electoral roll at the correct address the lender cannot find you and cannot credit check, you. For something that feels so insignificant can actually have a huge impact on your score. 

 

The best way to gauge this is by looking at your credit card limit. Most lenders like to see you stay within 50% of your limit. This shows to them that you are not over reliant on credit and can manage credit effectively. So, using credit sparingly and paying it back on time is a great way to boost your credit score. Using credit little and often will help boost your credit score as you show a history of careful use. 

 

Someone who has never had credit before may have a low score just like someone who may have abused credit or failed to pay it back because you have no track record of using it. 

 

TOP TIP – set up standing orders to your credit cards to ensure you pay off at least the minimum payment each month so that you never miss a payment. 

 

Sometimes someone may have taken out a credit agreement in your name fraudulently or it’s been registered to your address by mistake. This can drag down your score if multiple applications for credit are made or the payments are managed because they become linked to you. So, a good exercise when you get your credit report is to read through it all and make sure all of the information on there is correct. If it’s not, then you speak with the credit report provider and the credit agency to have it amended or removed. 

 

The main cause of CCJs is not people ignoring penalty notices but not getting them in the first place! How does this happen? People move house but don’t update their addresses, so the fines get sent to an old address, get missed, become defaults, and then become CCJs. If you update your addresses with your credit providers and the DVLA then any speeding tickets or missed payment letters wont go missing! 

 

This may sound ridiculous but closing accounts can reduce your credit score just as much as opening them. Plus, if you close an account to then must re-open another is another application for credit which will also impact your score. So rather than closing credit cards you don’t use or close them to stop you using them, leave them open to keep your credit history going. Having a credit card and not using it is another good sign of financial maturity to lenders. 

 

We would advise you check your report once a month, any more than that and you’re not only going to drive yourself mad but you wont see much change. Reports are updated each month so check yours each time a new one is issued to see if there are any changes on there. These changes may good or bad, if they are bad or it’s a change you haven't made you can react to that as fast as possible to rectify it before the problem gets worse. 

“The saying is its easier to put out a match than it is a fire”. 

 

 

One thing you can do which may be the hardest of all is to do nothing. Each time you take out a new credit agreement this impacts your credit score and multiple applications for credit in a short space of time is a red flag to lenders. So, if you have done the things above, all you can do is let those actions take effect. There is no hard and fast rule on how long it takes for your score to improve but if you do the things above, they will work, but it does take time. Changes don’t happen overnight, so you need to stick with it. 

 

It can take years to build a score but seconds to ruin it, so guard your credit score with your life 

 

If you have any questions or would like more information please get in touch 01482 205084, or email info@greenandgreen.net