The higher your credit score the healthier your credit file. This is because a high score indicates you have a history of managing your credit sensibly and making repayments on time. It pays to proactively manage the health of your credit score.
When you apply for credit, the credit providers will use your credit score to help them decide whether to lend to you. Each credit provider may have a different approach depending on the information they have access to and their lending criteria. The higher your credit score, the better your chances of getting approved for credit so it’s smart to look after it.
Here some easy steps that may help you improving your credit score and keep you credit report healthy.
- Check your credit report. Your credit report contains the data used to calculate your credit rating. The information contained in your credit report are the one credit providers will see when you ask for a loan.
- TIP Check that in your credit report there are not errors, for example late payments which are incorrectly reported. You can read more on how to fix credit report errors here.
- TIP In your credit report check that there are not fraudulent activities, for example credit applications which you didn’t ask or defaults you never did.
- Pay your bills on time. Defaults and late payments can have a negative impact on your credit score.
- TIP Consider setting up direct debits and schedule your loan repayments based on your pay day.
- TIP If you missed a payment, make sure the following ones are paid on time. The more you will pay the next ones on time the better will be for your credit score. The older is the problem, the less it counts. Credit providers can see how you are managing your credit; and you can show you are doing it well by paying debts on time.
- TIP If you notice you missed a payment, try to pay it within 14 days. You may not be reported being in arrears - this is called ‘grace period’.
- Avoid multiple late payments. It is obvious that the more late payments you collect the worst it is for your credit score and reputation. Also this can lead to where debt collection agencies are involved and can negatively impact your credit score.
- Avoid negative entries on your credit report. For example defaults, court judgments, excessive credit inquiries may have a bad impact on your credit score.
- Apply or open a new credit account only if needed. Ask yourself if you really need a new credit card, or a new loan. Opening new credit lines can harm your credit score as it can be seen as too many hard inquiries and attempts to overspend and accumulate debt.
- TIP A ‘better credit mix’ it may not improve your credit score.
- Limit your credit applications. If you do a lot of credit applications it looks like you rely on credit and therefore you are a high risk subject to land money.
- TIP There is not difference in how much you ask and for how long or the purpose.
- TIP Also applications to buy now and pay later retail finance can result in a credit inquiry.
- Notify lenders of any changes on your contact details and address. For example if you change phone number, address, email. This will also help you to be notified about their bills and don’t miss payments. See point number 2 "Pay your bills on time". 🙂
- Seek help from your credit providers if you are having trouble meeting your repayments.
Does ordering my credit report impact my credit score?
Ordering or checking your report regularly won’t affect your credit score.
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