10 TIPS TO IMPROVE YOUR CREDIT HEALTH

It can be tough to keep on top of your finances at the best of times. But with the UK currently in the midst of a cost of living squeeze, many people are finding it even harder to manage their money. If this sounds familiar, take comfort in the fact that you’re not alone – energy bills, fuel, water and even the weekly shop are all costing more than they did last year, stretching family budgets even further.

At a time when money is tight, it can be tempting to miss a scheduled payment or exceed your credit limit. But this can have a damaging effect on your overall ‘creditworthiness’ – the term used by lenders to assess your ability to repay any money you owe. Your credit score or credit rating, along with evidence of your spending habits and money management skills, determine your creditworthiness. Making the wrong financial decision now could prevent you from being approved for future credit, limiting your options at a time when budgets are already tight.

Fortunately, there are some simple steps you can take to boost your creditworthiness and increase your chance of getting the right credit, at the best rate, when you need it most. Here are our top 10 tips to improve your credit health…

1. Show proof of address It may sound obvious but being able to prove where you live will instantly boost your creditworthiness. The best way to do this is to register on the electoral roll at your current address, even if you live with your parents or in shared accommodation.

2. Pay bills on time Demonstrating your ability to make regular, timely payments to existing lenders is a great way to prove that you’re a reliable and responsible borrower. This applies to credit cards, loans, subscription services like Netflix and even utility bills.

3. Communicate with creditors Even the most reliable borrowers can hit a rough patch. If you find yourself struggling to make your regular repayment, talk to your creditors at the earliest possible moment. They may be able to adjust your payment plan to better accommodate your current situation before it affects your credit health.

4. Don’t let an ex affect your finances Make sure any relationship break-ups are also financial break-ups. If an ex is still linked to your address, bank accounts or credit cards, their financial problems could soon become yours.

5. Build credit history It may sound strange but having little or no credit history can make it hard for lenders to assess your creditworthiness, meaning your application may be declined. Demonstrating that you can regularly repay what you’ve borrowed is better for your credit score than having no debt at all.

6. Limit credit applications Equally, applying for too much credit in a short space of time can be a red flag to lenders, who may see it as a sign of financial desperation. Choose your credit applications wisely.

7. Show stability Lenders like to see that an applicant is stable and reliable so try not to change jobs or addresses too frequently if you want to improve your overall credit health.

8. Check your credit report Your credit report contains a history of your financial behaviour, including how well you manage your mortgage or rent, credit cards, loans, utilities and even your mobile phone contract. A small mistake, such as an incorrect address, can negatively affect a lender’s decision to offer you credit, so if you spot an error, tell the provider immediately.

9. Be alert to fraud Get into the habit of regularly monitoring your bank and credit card accounts. If you spot any unexpected or suspicious activity, alert your lender immediately to avoid damaging your credit health. Check your credit file for signs of fraud, too.

10. Limit gambling spends Finally, it can be tempting to bet more than you can afford when times are tough. If you’re finding that your little flutter is becoming more of a regular splurge, then talk to family and friends or contact Gamblers Anonymous for help in getting your gambling under control – before your credit health starts to suffer.