Having a good credit file has many benefits with the most obvious benefit being more accessibility to affordable credit, bigger credit limits and lower interest rates. If you already have good credit and want to keep on top of your credit score then keep reading, as we’ll be covering 5 simple habits to ensure your credit doesn’t slip.
Before we go into our 5 habits; what options are available if you have bad credit? You may want to consider looking into a credit building credit card such as Vanquis credit building card or a thimbl. credit card. You can also access free financial advice through non-profit financial charities such as Money Helper who will be able to give you all the information you need.
5 Habits for Good Credit
1. Pay Bills in a Timely Manner – If you have good credit and want to keep it that way, paying your bills on time is a great way to go about it. Missing payments can negatively impact your credit rating. Where possible it’s a good idea to setup direct debits rather than pay manually and you can use budgeting apps such as Plum to help you budget your outgoings and income to make paying bills and monthly money management easier.
2. Keep Credit Utilisation Low – Credit utilisation in simple terms is the limit of your credit card vs. the balance of your credit card. To work out your credit utilisation you will need to accumulate the credit limits on your credit cards and the credit card balances. Next, you’ll divide your total combined card balance by your total available credit. Once you have this figure, you then need to convert this into a percentage, and this is essentially your credit utilisation percentage. Typically, the lower this percentage is, the better.
3. Check in on your Credit Score – Keeping on top of your credit score is a healthy habit to get into. Regularly checking your credit score keeps you in sync with where you’re at. It’s also a good way to check for any inconsistencies or errors which you can raise through your bank or through a certified Credit Rating Agency, such as Equifax. Ultimately, if your goal is to build credit, checking in on your score and seeing positive incremental changes is a great way to stay motivated to keep improving.
4. Check your Credit Report – Checking your credit report for inconsistencies is always worth doing. It may be a good idea to put a reminder in your calendar to check your credit report every 3 months. You want to look for any discrepancies which may have a detrimental impact on your credit score. A great example of a common inconsistency on a credit report is typos in your fixed address and your address listed on your credit report. If you’ve moved house or have spotted an address error, it’s worth raising as having multiple locations is seen in a negative light by lenders, as they want a fixed abode as a line of professional communication with you.
5. Don’t Apply for Credit too Often – Having multiple credit accounts can be a positive sign for lenders, provided they are well-maintained and are healthy. However, the more lines of credit you have the faster repayments can snowball and make it harder for you to keep on top of or budget for. Having too many credit applications won’t do your creditworthiness any favours and will raise eyebrows from the potential creditors as new credit applications will show on your credit file if you’ve completed a hard credit check when applying.
So, there you have it – instil these 5 habits into your financial routine to try and give yourself every possibility to maintaining good credit and even improve up your current score!
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