As we all know, borrowing restrictions from all the major lending institutions have been extremely tight recently and, with banks and building societies effectively having their pick of applications, maintaining a squeaky clean credit score has become ever more important. Here are 5 top tips you ensure that your credit history doesn’t close any doors.
1. Make sure that you have a credit history
Although it might seem as though lending institutions would look upon you more favourably if you never borrow money or get into debt, in fact what this means is that you have no credit history for them to check and so are quite likely to have any borrowing applications rejected. One of the easiest ways to get around this is to apply for a credit card, use it on a regular basis (but without going over 10% of your designated limit) and to make your payments on time every time. Many people don’t realise that just having access to credit is not enough to build up an excellent credit score – you have to actually use it, but without coming anywhere close to maxing out.
2. Make sure that you are on the electoral register
Actually, this is one of the first things to confirm. Credit agencies use the information on the electoral register to check you out, so it is vital to ensure that your name is on there.
3. Pay, and pay on time
Paying late is one of the deadliest sins in terms of protecting your credit score, but not paying at all is the biggest one of all. Whether you set up a direct debit or standing order, write the due date in a diary or set a reminder on your mobile phone, always make sure that your payments are in on time. If you use online banking services, remember that it can take several days for the payment to go through, so give yourself a few days’ grace. If, for whatever reason, you find that you unable to make all or part of a payment, don’t just ignore it. Contact the company that you owe and discuss the situation with a view to coming to a suitable arrangement before you find yourself dealing with a debt collection company or faced with a County Court Judgement (CCJ). Remember too that it is not just credit card companies which will penalise you for late or missed payments, and defaulting on a loan payment will also adversely affect your credit score.
4. If you are continually turned down for credit, then find out why
Being continually turned down for credit will look bad on your credit history, so if it does happen then find out from one of the credit agencies why and then work to rectify the issue. In addition, don’t make lots of credit applications within a short space of time as this may have you perceived as a debt just waiting to happen.
5. Try to build up an emergency fund
When you are already juggling bills, it can be hard to try and put some money on one side, but having an emergency fund to help deal with those unexpected things in life can make the difference between getting by and maxing out your credit cards.
Ensuring that your credit rating is in order and your finance is in place are the first steps in being able to move forward with your property purchase. Once these have been taken care of, you can then concentrate on achieving the best purchase price for the property of your choice.