There is always a way.
Ok, so you don’t have the worst credit score – and you’re not suffering from poor credit so don’t have to rely on bad credit loans or no credit check loans. And yet your credit score still isn’t up there at the top of the charts. Credit scoring is used by lenders to determine everything, from what kind of lending product you can be offered, to the interest that you’ll pay on what you borrow. The difference between a fair or average credit score and a great credit score could save you a lot of cash.
Why it pays to improve a fair or average credit score
- You’ll have more options when it comes to borrowing
- Better deals on products are available the higher your score
- If you want to pay the lowest interest rates you need the highest credit score
- If your partner doesn’t have a great credit score then yours needs to be the very best it can be
How to improve a fair or average credit score
Start paying off some debts. One of the most common factors in keeping a credit score stuck is debt levels that just don’t change and are slightly out of kilter with your earnings. If you’ve had that overdraft for three years and your credit cards have been maxed out ever since you first received them try paying some of that debt off. The improvement to your credit score from even a 5 – 20% reduction in your overall debts could be significant.
Challenge any unfair defaults. We all make mistakes with money but there’s no reason why one mistake many years ago should be holding you back forever. If there is a default on your credit score that you just don’t feel is fair then you can do something about it. First, write to the lender and ask them to remove it and if that doesn’t work ask credit agencies to add a Notice of Correction to your file with a concise note of exactly what happened and why the default is unfair. You can’t have a great credit score with a report full of defaults so this is a step worth taking if you’re ready to stop being ‘average’ when it comes to your credit.
Stop withdrawing cash from a credit card. According to Martin Lewis of Moneysavingexpert.com, if you’re withdrawing cash from a credit card then lenders will automatically take this as a sign of poor money management. It doesn’t matter if you’re not going over the limit or defaulting on payments, it can still affect the way that you’re viewed as a potential borrower by lenders.
Beware of making inconsistent credit applications. Even if all the other factors are in place for a great credit score, if the applications you make for credit are different every time your score could lose ground. So, for example, if you have different phone numbers for personal and business, make sure that you just use one for every application you make. Otherwise you might find yourself flagged in the context of fraud and that can have a heavy impact on what might be an otherwise perfect score.