Improving credit starts with your Free Credit Report
First things first: to improve your credit score, you need to know what your credit score is. A good way to find out is to sign up for your TotallyMoney Free Credit Report and Live Score. Your score is calculated in real time and is updated each time you log in, so you always have the most up-to-date view of your financial health. TotallyMoney uses data from credit reference agency TransUnion to build your Free Credit Report and Live Score. You can see what your credit score means in terms of your credit rating by clicking here.
The electoral register: great for improving credit
Being on the electoral register can work wonders for improving credit, as it lets lenders verify your name and address. Not only does being on the electoral register show you’re a genuine person and that your credit applications are legitimate, it can also prevent delays in the lender’s decision-making. If you’re not on the electoral register, lenders might have to verify your identity in some other way — or worse, they might refuse your application for credit altogether. Any hint of doubt as to who you are can set lenders’ alarm bells ringing. Think of it this way: if a lender accepts a credit application from someone whose identity is uncertain, will they feel confident they’ll be able to get back their money back?
Improving credit happens by using credit
If you want to improve your credit score, you have to show lenders you’re capable of borrowing money and paying it back when you should. One of the easiest ways to do this is to use a credit card responsibly. Preferably, this means paying off the full balance each month, but if this isn’t always possible you should make at least the minimum payment, ideally more. To avoid missing payments, you should set up a direct debit each month.
Always pay on time to improve credit
It’s best to set up direct debits for at least the minimum monthly payment. Then your credit history and rating won’t take a dent. Looking at your Free Credit Report is also a great way to see an overview of your accounts, and check if anything needs your attention.
Use your savings to clear debt
It might sound obvious, but using your savings to clear debt is great for improving credit. This is because it shows lenders you’re capable of paying back any money you borrow. Also, by not being in as much debt, you’ll be using less of your available credit. This shows lenders you’re not pushing your credit limit to extremes and that you’re on top of your finances. What’s more, not using your savings to clear debt will likely end up costing you more. The interest you pay on your debt is usually much more than the interest you’ll accrue on your savings. For more advice about improving credit, read our guide: ‘11 tips on how to improve your credit score.’
Sever financial ties
If you’ve taken out joint credit with someone — such as a joint bank account with an overdraft, or a mortgage — their credit history and rating can affect yours. So, if the other person has a bad credit history and rating, you should keep your credit arrangements separate. It’s important to break these ties if you’re no longer financially associated with them, too. Get in touch with the three credit reference agencies — TransUnion, Experian, and Equifax — and ask to be financially disassociated. Looking at your Free Credit Report is a great way to see if you have financial ties with someone else.