As I’ve gotten older, I’ve appreciated my older sister a lot more and her words of wisdom when it came to credit scores and credit cards. I got my first credit card at the age of 22 or 23, which is fairly young. However, because of the words and advice of my sister it helped me over the years with my credit score and made me aware of my credit from a relatively young age. So I was always conscious of the little things because I knew it would affect my credit. Here are some tips that helped me keep my credit on track;
1. Register to vote.
Believe it or not but registering to vote helps build your credit, I didn’t actually believe this at first because it was just so random and no one had ever told me this before nor did they mention anything like this in school but yep its correct! Registering to vote for any election will help improve your credit score.
2. Never miss or be late on any credit repayments
My sister told me one thing when I first got my credit card and it stuck with me ever since. ‘Don’t spend money on your credit card if you know you can’t afford it with the balance in your current account.’ And I know that defeats the objective slightly of having a credit card but for me it always meant I never missed a payment and could always pay back whatever was on my credit card balance.
3. Minimize credit applications.
The less times you apply for things on credit the better for your credit score. Continuously applying for credit will effectively reduce your score and resulting in you getting declined for whatever you apply for on credit. Lenders like to see loyalty, so when you don't frequently open up bank account or new credit accounts they see it as you being unproblematic and loyal.
4. Don't use more than 25% of your credit allowance.
Honestly when it comes to this tip I don’t understand why but lenders don’t like you spending more than 25% of your credit allowance because you would think having a credit card allowance gives you the right to max it out if needed. However, they’re looking at your spending habits and your ability to pay it back, Spending more than 25% indicates to them that you may be a little reckless with your spending.
5. Cancel unused credit and store cards
As weird as it sounds but under spending/no spending on credit cards is also bad for your score. I know it sounds rather odd but lenders look at your spending habits and ability to pay back. So if you don’t spend at all they have nothing to judge you on and therefore still class you as ‘high risk’ to lend too.
‘Don't panic if your credit score drops slightly. It's what’s on your credit report that matters’
I absolutely love Martin Lewis and follow pretty much all of his advice, I have attached a link where he goes into more details about Credit scoring.
How to improve your credit score - MoneySavingExpert