Credit scores are extremely important in this day and age and that includes whether you want to buy a car, house or investment property. Having a good credit score can help you manage your payments better as it will allow finance companies to give you a lower interest level loan/mortgage. This means you will have lower monthly payments on the same amount of borrowed money than someone with bad credit. In some cases you may save thousands of pounds/dollars in interest.

Whether or not you have a good or bad credit, there are some ways you can increase your credit score to make you eligible for those better rates when borrowing.

Acknowledge the importance of your credit score
If you want to attain a great credit score you need to be able to grasp just how important it is and start to work on your financial habits straight away. The credit score must be checked frequently to ensure you are on track and not missing any payments, this is also a great way to ensure you have not had anyone steal your identity. Sometimes the bank won’t know if someone has done something in your name without your knowledge for a while and this is why you need to keep on top of it.

Create a budget and adhere to it like a religion
Living within your means allows you to budget and save for emergency like a job loss/redundancy and any unexpected costs that may come up. Having a good credit score also depends on how well you manage your finances when things are not going so great, it’s easy to manage when all is well. Having an emergency fund and a contingency plan can help greatly when things go wrong.

Having a monthly budget of how much money comes in, is saved and is invested is the perfect recipe for insuring all will be well in the long term.

Avoid credit checks
Credit checks in your name by someone who is looking to lend you money or lease a car etc will hurt your credit score regardless of whether or not you get the finance/loan approved. Getting a check several times will definitely negatively affect your credit score so keep those to a minimum.

When buying a large ticket item, a house or a car it is best if you do your homework in advance. This will mean that credit checks etc can be grouped together rather than be drawn out over a few months.

Don’t cancel your credit card
If you’ve had a credit card a long time and it has been well managed, this will have a good affect on your credit score, it will show a long term relationship with a lender that has been well managed. This is what potential lenders look for when they look to give out loans and also when they are deciding what rates they will give you. Use your credit card, within means, pay the bill off way before it is due, better if you can issue a direct debit from your bank account to pay off your credit card every month. Try to keep below 30% of your available credit to ensure you are building and maintaining a healthy credit score.

Get started ASAP
Recognising that credit score will indeed help you out in the long term, using that long term thinking mentality that we so often push here on GSY will help ensure you have the time you need to bring up and maintain your stellar credit score. Building credit is not a sprint, it’s a marathon and it really does take time, if you have historically had a bad credit rating it will take even longer. Don’t let that deter you from making the choice to change that, start from today, make the decision and become mindful of your finances. You will be glad you did.

 

Create a budget, pay your bills on time and be responsible with your credit limit/bills. Do these things and enjoy the low interest rates for frugal individuals. GSY