As we approach a new year, resolutions will be at the forefront of many minds. Rather than attempting that fad diet, or vowing to finally clean out the garage, why not concentrate your efforts on cleaning up your credit report instead?
Personal loan provider, Hitachi Personal Finance, has collated a simple list of useful dos and don’ts to help you achieve and maintain a good score.
Register to vote
Being on the electoral register helps potential lenders verify your identity, so make sure you’re registered at your current address. It’s an extremely easy way to improve your credit score, and also quick to do online via https://www.gov.uk/register-to-vote
Know your numbers
Experts say the perfect amount of credit utilisation is around 10-30%, as it shows you can lend responsibly without getting carried away. In other words, if you have a £15,000 limit on a credit card, try not to charge more than £4,500 at any one time.
Play by the rules
Sometimes it can be tempting to get out of that gym membership by just cancelling your direct debit, but without proper account closure, you could be making yourself vulnerable to complaints from the company and ‘missed payments’ creeping onto your credit report.
Sanity check closed accounts
Certain accounts, such as utilities, can take weeks to even themselves out once you’ve requested closure, which could lead to a missed payment. If you’re moving away, leave a forwarding address, and, just to be safe, give the company a call back after a month or so just to double check there’s nothing left outstanding. A lot of utilities providers and councils also now have apps or online account trackers, which make the moving and/or account closure process a lot easier.
If you’ve ever been financially linked to someone that you no longer need to share an account with – whether that’s a friend, a housemate or an ex-partner – it may be a good idea to de-link from them as soon as you can, or their financial behaviour may reflect badly on you. You can find financial disassociation instructions from the three major credit agencies, on the Equifax, Experian and Callcredit websites.
Underestimate the effect of a missed payment
A missed payment could stay on your credit report for at least six years, so make sure you pay all of your bills on time.
Be afraid to look
Checking your credit report does not negatively affect your score. In fact, it doesn’t affect it at all, no matter how many times you check it. So, sit back, relax and check away. It’s always better to be informed, so you know what you need to work on.
Forget your past
It’s not always easy to remember every address you’ve ever lived at, especially if you’ve moved around a lot. However, having a full, detailed record of your past addresses is absolutely vital for getting an excellent credit score. If you can’t remember all the address details, check the ‘delivery addresses’ section on your PayPal or Amazon accounts. If you can’t remember how long you lived somewhere, check your online banking for dates of first and last mortgage or rent payments.
Worry too much
Credit reporting is there to help everyone, from businesses to consumers. It’s not used to spy on you and information such as how often you’re looking at products on price comparison sites, your age and your salary is not available for all to see.
A spokesperson from Hitachi Personal Finance added: “Small changes can make a big impact to your credit score, so take the time to ensure you are fully informed, and then apply any recommended ‘quick wins’.
“Not missing payments, and not spending above your perfect credit utilisation percentage may take a bit of getting used to, but these practices will be worth the effort in 2018, and beyond.”
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