The start of a new year is a good chance to review your finances and make some quick changes which could help improve your credit worthiness within just a few weeks. Having a strong credit rating can help bring you one step closer to securing finance as it is a way for lenders to check if you are financially reliable, whether you're trying to get a loan, credit card, mortgage or car finance.
It’s important to recognise that there is no actual ‘credit score’ as different lenders will use different tools to measure your credit worthiness when it comes to borrowing money - no matter how big or small the amount. A higher level of worthiness is a positive sign to lenders, so it is worth taking steps to avoid bad habits that could be detrimental to your financial standing.
The current cost of living crisis is pushing household budgets to the limit, but it’s also making getting credit harder.
Increasing your borrowing is a risky choice for 2023 as interest rates are at record-breaking levels and the pressure to keep up repayments could be overwhelming.
But if it’s an option you want to have in your financial first aid kit in case of an unexpected emergency, it’s worthwhile taking steps over the next few weeks to make sure your credit rating is in its best shape for the new year.
Here are 13 quick wins that could instantly improve your credit worthiness:
- If you rent, ask your landlord to put you on the Rental Exchange Initiative to show you pay rent on time
- Check your address is correct on older, active credit accounts, as this helps with accuracy for future credit
- Add a landline number to credit checks to prove stability
- Get your name on household bills, even if you’re in a house share as this proves you make payments on time
- Get on the electoral roll to boost your score by around 50 points
- If you can’t register to vote, get proof of residency to have it added to your credit report
- Make sure all of your direct debits are paid on time
- Do not withdraw cash on a credit card, as you will have to pay interest fees
- Disassociate yourself from previous financial partners by closing joint accounts, mortgages and more
- Use calendar reminders to stay on top on your finances so you don’t miss a payment
- Be frugal, and live within your means so you’re more likely to borrow less
- Check your credit report for mistakes, and contact the credit reference agency directly to fix any you find
- Protect yourself from scams as falling victim to one can cause unfair damage to your credit score
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