While most people have getting physically fit in mind each New Year, at Nottingham Credit Union we are focusing on how you can improve your credit file to get financially fit for 2018.
There are a number of simple ways to improve your credit rating, even if you have a poor credit score, and lots of little things you can do to make your credit score go up. Here’s our top tips to follow:
Check your credit file
Knowing what’s on your credit file is half the battle – so you have a realistic picture and can deal with what’s there. Mistakes can be removed and negative feedback can be put right.
Your credit rating will show all of your borrowings over the past six years and whether they are up to date. It shows you exactly what lenders can see when making decisions about whether to lend to you.
Make sure you close old credit cards which you’re not using as these will show as an amount of money you have access to and may also be off-putting for lenders, who may not want to lend you any more money.
Also be aware that there are three different credit reference agencies which might hold different information about you. These are Experian, Equifax and Call Credit.
At Nottingham Credit Union, we would always say that you don’t need to pay any money to access your credit file. Free tools like Money Saving Expert Credit Club and Noddle will help to you see the full picture.
Budget, budget, budget
It is so important to set up a budget with all of your income and expenditure so you can make sure you are keeping on track of your money and not missing any payments.
Setting up a budget account (or a jamjar account for your bills) is a great idea. We would recommend that you have a separate account for bills so that it doesn’t get mixed up with your day to day budget, where you have a set amount to put in. This will help to ensure that all bills are being paid on time, which in turn will help you to improve your credit rating. Importantly, it will help keep your loan and credit card repayments up to date, which will show on your credit file.
Keep away from payday lenders
Don’t be tempted to visit a payday lender if you’re in need of a quick fix solution. This particular quick fix can result in long term financial problems and leave you trapped in the debt cycle.
Going to a payday lender will damage how other lenders will view you. Some lenders will not lend to anyone who has borrowed from a payday lender and it will show on your credit history.
Chances are, having a payday loan on your credit record will reduce your credit score – even if you have paid on time. It’s not worth it and there are other solutions out there such as your local credit union.
Look at a small loan or a rebuild your credit history card
Some credit cards, used wisely, will help you to rebuild your credit rating, if you use them with care (and only if you use them with care as it can be too tempting to use for every day purchases once you have them). If you do need a small loan or a credit card, make sure you pay the balance in full, on time. Making sure that you can afford the repayments (and showing that you are doing this) will show that you can manage your money effectively and will help to repaid your credit record.
Make sure any existing debts are paid on time
If you are being chased by debt collectors because of missed payments, this can be incredibly stressful. Talk to your lender, even if you have to negotiate reduced payments, as an arrangement looks better than a default on your credit file.
Defaults and CCJs will stay on your credit file for six years so talking to your lender can help to stop this before it happens.
Don’t apply for lots of credit at once
If you’ve been turned down for a loan because of a poor credit history, it can be tempting to keep applying until you find one that will accept you – which is unlikely as too many credit applications over a short period of time will damage your credit score.
Whether you’re facing financial difficulties, or if you just want to talk to us to find out how to manage your money better, get in touch with us at Nottingham Credit Union. We offer a range of affordable loans and savings products, where you will pay less than with high cost lenders.