Top tips for a healthy credit report
Getting and maintaining a good credit report is key to looking after your finances, so we've put together these top tips and helpful video to help you along the way.
Register to vote
Appearing on the electoral register can help lenders verify your identity, so make sure that you’re registered under your current address. It’s an extremely easy way to improve your credit score, and also quick to do online via www.gov.uk/register-to-vote
Know your numbers
Credit cards can be a great way to build your credit score, especially if you have an otherwise thin file. But be careful, that doesn't mean maxing out your credit limit each month.
The optimum amount of revolving credit utilisation is around 10-30%, as it shows you can lend responsibly without getting carried away. In other words, if you have a £5,000 limit on a credit card, try not to charge more than £1,500 at any one time. The easiest way to do this is to either use your card for small purchases through the month eg petrol or the weekly food shop.
Paying it off straight away is a great way of getting the benefit of building your credit score without paying interest.
Play by the rules
As tempting as it might be to just cancel that direct debit for the gym or phone contract without going through the correct channels with your supplier, you could be making yourself vulnerable to complaints from the company. Missed payments markers could creep onto your credit report which can stay on there for up to 6 years as well as receiving a very big bill for outstanding payments. Always make sure you cancel with the supplier before you cancel your direct debit.
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 then leave a forwarding address and 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 amending accounts 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 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 TransUnion websites.
Update your logbook
When you're moving home, there's a lot to think about, but make sure you update all the relevant documents, including your vehicle's log book (as well as your driving licence). Failing to do so could mean you are receiving important communication to an old address and not being notified.
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.
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