“Tricks” to Improve Your Credit Score
With credit scores being used in many other areas outside of just getting a loan, it is important that we try to maintain a good/high credit score.
We need to review our credit reports and credit scores on a regular basis, looking out for any errors or omissions that need to be corrected.
Also knowing what factors are used to make-up our credit score is important as well.
Payments make-up 35% of our credit score.
Balances we carry make-up 30% of our credit score.
How long we have been in the credit bureaus makes up 15% of our credit score.
Inquiries or how often we apply for credit makes up 10%.
And the types of accounts we have makes up 10%.
So knowing all this helps us in looking out for things we may do wrong and hurt or lower our credit score, but they are not “tricks”, just usable knowledge. However, there are a couple of tricks to know that can help improve your credit score.
Being on the Electoral Register helps your credit….how you ask???
As per Equifax, one of the credit bureaus here in the UK, “The reason being on the electoral register may help improve your credit score is because it allows any interested party to confirm that you are who you say you are and that the details you have provided are accurate.”
This will aid lenders in verifying who you are and where you live, and a little trick to improve your credit score.
Moving Balances and Using Eligibility Checkers
Every time you apply for credit a “footprint” or inquiry is placed on your credit report, too man of these lower your credit score.
Using eligibility checkers to see if you will be approved for a loan or credit card, prior to actually applying, does NOT affect your credit score.
In addition, the amount of credit you have available and have used affects your credit score.
If you owe £6,000 on two (2) credit cards, each with a £4,000 credit limit and each with £3,000 balances, you are close to your credit limits, and are using 75% of your available credit.
If you spread the £6,000 you owe over three (3) or more credit cards, you reduce how close you are to your max credit limits.
This trick, is tricky to do as it involves balancing out opening another account, which can affect your credit score as well.
Keep Credit Card Balances Low
Keeping your credit card accounts under the magical number of 30% of your available credit, will aid your credit score as well.
The Head of Consumer Affairs at Experian, another one of the credit bureaus in the UK, James Jones states, “Using a credit card wisely can help boost your credit score, but do be careful because cards can be expensive if you build up significant debt on them and are not on a promotional rate of interest.”
“Also, how much of your card limits you regularly use each month can have a big impact on scores as it shows how reliant you are on credit.”
“For example, keeping card balances below 30% of the limit can gain 90 points. On the other hand, maxing out several credit cards can put an unwelcome dent in your credit score.”
90 points can be a substantial increase in your credit score, and could help you get a lower interest rate on loans, which saves you money over time.
Pay On Time
Since payment history makes up 35% of our credit scores, it goes without saying, pay your accounts on time.
This is not a trick to help your credit score, just good common financial sense.