Our credit history and our credit scores are fluid, they can change over time.
Every six (6) years any accounts that are old on our credit files for the six years should drop off, and our credit scores can change all the time depending on a few factors.
The factors that can affect our credit scores are:
* Payment history
* Types of accounts we have
* If we apply for new credit
* How long we have had credit
Obviously the factors that has the most influence over our credit score is payment history. If you make late payments, or default on a loan, it has a huge negative effect on your credit score.
So one no brainer way to get and keep a good credit score is to pay on time.
Credit scores are important, and not just for receiving credit, they are used in other aspects of our lives, such as for jobs and getting insurance.
So we need to not just be aware of our credit scores, but acknowledge how important they are to our lives.
Here are 5 tips to help you improve your credit score.
It is important to check your credit file regularly, at least once a year. And you can do this for free.
There are three credit bureaus here in the UK:
* Call Credit now Transunion
The reason why you want to check your credit report is the obvious reasons, for errors or omissions.
These errors or accounts you may be paying that are not listed, can be costly to your credit score. So you want any errors corrected, either by the creditor themselves, or through the credit bureaus.
Any accounts that you are paying and are not listed on your credit report, you would contact that creditors directly and inquire as to why the account is not reported.
Not all lenders report to all three credit bureaus.
Pay On Time
As we mentioned before, payment history is a biggie when it comes to improving your credit score. Payment history is 35% of your credit score, so it is easy to see how a few late payments could cause your credit score to nosedive downward.
The Electoral Role
If you are not already, register to vote and get on the Electoral Role.
Being on this list helps prove you live where you state you live, and aids lenders in proving your identity.
It also reduces the risk of fraudulent credit applications in your name and identity theft.
Balances on Your Accounts: Your Total Indebtedness
Having high balances on credit cards and loans decreases or lowers your credit score.
Oddly enough, having £10 of debt between 3 accounts, hurts your credit score than having £10 in debt between 5 accounts.
As long as the accounts are not near their credit limit, this can help improve your credit score.
Paying off accounts, especially credit cards, or transferring balances to other cards you already have to reduce the balances from being near their credit limits, can help increase your credit score.
But as we will see, not taking out new accounts to transfer balances is also important.
Do Not Apply For a Lot of New Credit
Each time you apply for credit, the lender will look at and review your credit history. These inquiries are called “footprints” as they leave a trace of who has viewed your credit file.
Too many inquiries or footprints, reduces your credit score.
So limiting the number of inquiries by not applying for new credit, can help in improving your credit score.
As we can see, credit scores are an important part of our lives, and one we can change and improve with time, and these few tips.