If you’re looking for a simple way to increase your credit score, keep reading as we have a great tried and tested way to do this. We can show you a simple way to be smarter with your money.
It was actually by complete chance that i began to do this back in 2005, without even knowing i was doing it. It wasn’t until a mortgage advisor told me i had a great credit score and the main reason why that we (my husband and i) began to do it purposefully.
In fact, even if you already have a good credit score, or have no idea what is currently is, we should all be dong everything we can to keep it as high as possible.
So, how do you increase your credit score?
What Is A Credit Score?
Your credit score is an indicator to show how likely it is that a lender would offer you credit. For example, when you apply for a loan, credit card or even a mortgage, the lender will look to see what your credit score is like. This gives them an insight into your behaviour with money and paying off debt, based on the way you’ve acted previously.
They will actually look at various bits of data to come to this conclusion including…
- How many credit applications you’ve made in the past
- How much you currently owe
- If you’ve paid off previous debt on time
How To Improve Your Credit Score
This might sound like a really backwards thing to do, but one of the best and simplest things you can do is to get yourself a credit card. Try to get one with a low balance – £500 perhaps as you don’t need much. Plus, you don’t want to tempt yourself to buy more with a high credit limit (if you can even get one with a low credit score).
Another thing to note is that lenders won’t see you as a couple (if you’re in a couple/married). They see each person as individuals so even if your partner has a credit card in their name. Make sure you get one in your name as well. This will make it easier when it comes to things like getting a mortgage if you both have great credit scores.
Why Get A Credit Card
Again, it seems backwards but by getting a credit card and keeping it paid off, you’re showing you’re good with money and debt. A credit card is almost like a test to show lenders you’re reliable with your money, and if they lent you money, you’re very likely to pay it back on time and without issue.
How To Use Your New Credit Card
OK, so you’ve got your credit card, now what? The point of having this credit card is purely to use it and pay it off almost immediately. You do NOT want to see it as free money, or as a way to go out and buy more things.
You want to be doing this cycle of purchasing something on it and paying it off a few times a month if you can. For example, you could use your card to put your petrol on, a holiday, or perhaps your food shop. Then as soon as you can, pay it off in full.
Where you could get in to trouble with it is if you forget to pay it off and have to start paying interest on any purchases. Pay it off the same day you use it, or at the end of every month so you start again with a clear card. Whatever you do, do not start building up any debt on it!
Don’t put anything on there that you can’t pay off almost immediately! Also, NEVER withdraw cash from your credit card account as this will have an incredibly high interest rate. Only use it as a card. We are trying to make it look as though you’re better with saving money, not the opposite.
Changing Credit Cards
You want to be changing your credit card as soon as you can no longer use it without getting charged interest on it. So, say you have a card that gives you 2 years interest free. Just before those 2 years are up, look to change your credit card to a new one with 0% interest for as long as possible. You should also try to get one that allows you to transfer your balance free of charge. If you can’t get both, make sure you pay off your old card fully before the interest free runs out.
However, if you’re doing it correctly, you should never have a balance on your credit card for longer than a few days at the most. This credit card is just there to help you raise your credit score, so don’t go using it for anything else.
What To Do If You’re Declined
If you do ever try to get a credit card and are declined, don’t just keep on trying as this will put black marks against your credit history. These black marks can last for up to a year on your file so could hinder you later down the line.
If you are declined a credit card, do a credit card eligibility check to see which credit card companies might be more willing to give you one. This only does a soft search, so although you will see this on your file, lenders won’t. This means you can check as much as you like. However, for this purpose, you don’t want to get one with a high credit limit as you don’t need it.
We have both been using our credit cards for the last 15 years and now have an incredible credit score because of this.
What have you done to get your credit score up?
Would you get a credit card to help you become financially healthy?
Leave a Reply