Before we get to the point, it’s worth starting from scratch. So what is a credit score and why does it matter?
Credit score is a different assessment of your creditworthiness. For the lender or other lending institution, this is an indicator of how you have managed to pay off your financial obligations so far and the likelihood that you will pay the newly incurred debt. So every time you apply for a loan, loan, installment payment or take a subscription, your credit score is analyzed and it is assessed whether you are a trustworthy customer.
Why does credit score matter? The assessment of your creditworthiness determines 3 important things:
- Can you borrow
- How much can you borrow
- What interest will your loan be charged on?
Therefore, if you are considering taking a loan in the UK in the near future, it is worth taking care of your credit score . Especially for you, we have prepared a list of top 10 tips that will improve your credit rating and keep it at the appropriate level.
Pay off your debts
This is probably the most important advice when it comes to improving your credit score. If you have payments like overdue bills, credit or interest on credit card payments, your credit score will never be high. Only by paying off your payments regularly, are you able to improve your credit rating and show the lender that you are a trustworthy person and can manage your finances properly. If you care about improving your credit rating, give priority to paying off your debts.
Pay bills on time
This applies to both your bills and telephone charges or loan installments. Paying financial obligations on time is one of the most important factors taken into account when assessing your creditworthiness. Therefore, make sure that all bills are paid on time. An easy way to make sure that all payments are made on time is to set up direct debit orders or set a reminder (e.g. on the phone) that will inform us about the upcoming payment date.
Check your credit score regularly
Checking your credit score before applying for a loan will allow you to assess your chances of borrowing money. If your credit score is n’t looking well, hold on. Wait with the application until your credit rating is satisfactory. Otherwise, you risk your application being rejected, and it’s worth remembering that every rejected application is recorded in your credit history and has a negative impact on your credit score.
Register in the voter list
As citizens of the European Union, Poles have the right to vote in national local government elections and to the European Parliament. By voting, you will not only fulfill your civic duty, but also help to increase your credit rating. Lenders in the UK have greater confidence in people who are eligible to vote. Why? It is easier for them to verify your data if it appears in the registry. A presence in the register will also show your stability and attachment to the local community. You can register for the voter list here.
Check your financial report for errors
According to statistics, 38% of people who check their financial report for the first time find errors in it. Such errors can be transactions or credit applications that you do not recognize or payments that you have settled a long time ago and which appear to be overdue. Unfortunately, such errors can negatively affect your credit rating and lower your chance of getting a loan. To prevent this, check your financial report on a regular basis, and if you notice anything suspicious in it, report it and ask for its correction.
Check your connections
Do you share a loan with a partner? Do you have a shared credit card or bank account? If so, the lender analyzing your loan application will check not only your credit score, but also the person with whom you share finances. This means that your partner’s poor credit history can also have a negative impact on your credit score and your chance to receive a loan. If your partner has debts or is late with their payments, the best solution is to set up a separate account and separate your finances.
Close unused accounts and credit cards
Having many cards and low-activity bank accounts can put your credit score at risk. It is true that a credit card can have a positive effect on your credit rating, but only if it is “on the move” and when it is used and repaid regularly. If you use it only sporadically or you have problems with its regular repayment, your credit card may be seen as another financial obligation on you. So if you want to improve your credit standing, close rarely used accounts and cards.
Do not apply for more than one loan at a time
Applying for more than one loan at the same time may affect your disadvantage. Doing so for the lender can mean that you can’t plan your expenses properly or manage your budget effectively. These are not good signs. What’s more, all information on loan granting and refusal to you goes into your credit history. If your loan application has been rejected in one place, the next institution where you apply for a loan will be aware of this and may treat you in advance.
If you have a choice – always choose the soft credit check option
What is soft credit check? This is a way of checking your credit status without compromising your credit rating. When applying for a loan with a soft credit check, the rejection of the application is recorded in your credit history, but does not affect it negatively. Moreover, no bank or lender with whom we will apply for a loan will have insight into the result of such credit check. So, if possible, always apply for a loan using the soft option.
A good credit score for everyone can mean something different
Each lender will have a different limit when it comes to the minimum credit score needed to get a loan. This means that there are no uniform requirements when it comes to applying for a loan in the UK. Each lender has different criteria and requirements. Your credit rating may not be sufficient for one institution and the other will be considered appropriate. It all depends on where you apply for a loan and what loan you apply for. A low credit rating does not mean that you have no chance of getting a loan. Nevertheless, it is worth remembering that the better the credit score, the better loan offer we can expect, so it’s worth working on improving it!