Boost Your Loan Approval Chances
Getting approved for credit becomes much more likely with a higher credit score. The cost of credit usually decreases as your score increases too. Whether that be the cost of car finance or the cost of regulated services. Your credit score can also impact what repayment options are available to you, such as whether you can pay for your Gas and Electricity by direct debit or not. Prepaid meters are often the most expensive and people will low credit scores or a poor credit history are often forced to us this method.
To help you achieve a higher score and lower costs, here are five effective ways to enhance your credit score:
- Register for the Electoral Roll: Being on the electoral register is not only a legal requirement (by law, you must register to vote or you could fined up to £80) but also a credit score booster. With rolling registration, voters need to register annually to remain active. Don't miss out, as this demonstrates stability in your residency and aids identity verification. Even if you opt out of the public register, being on the electoral roll is beneficial. Lenders may reject your application if you're not registered.
Signing up is simple and valuable.
- Prioritize Timely Payments: Maintaining an account status of '0' with a credit reference agency indicates your on-time payments and commitment. However, missing a payment changes this status to '1,' indicating arrears. Most lenders offer a 14-day grace period before reporting arrears. Going from '0' to '1' will lower your credit score, and consecutive missed payments further decrease it.
Consistently missing three payments not only harms your credit score but also heightens the chance of loan rejection.Note: Even mobile phone contracts impact credit scores. Missed payments here affect your credit standing.
- Manage Credit Usage Wisely: Using only a fraction of your credit card or overdraft limit can elevate your credit score. Demonstrating that you have available credit but use it judiciously implies responsible spending. Aim to maintain your credit card balance below 50% of the limit, or even lower, for better results.
- Leverage Multiple Accounts: Having multiple up-to-date accounts can favourably impact your credit score. Managing various commitments with differing payment schedules highlights your organizational skills, dedication, and ability to meet financial obligations. However, beware of continually increasing credit card balances, which can indicate financial strain. If you use a credit card, aim to pay it off in full at the end of every month.
- Embrace Stability: Lenders value stability. Staying put in your residence allows consistent communication and reduces the likelihood of default. It reflects a borrower's commitment. Moving is inevitable at times, but notify your creditors promptly with your new address. This maintains a consistent address history on your credit file, enhancing your loan approval prospects.
By following these tips, you can improve your credit score and increase the likelihood of getting approved for affordable credit, not least for a loan with FDIT!