With inflation at a disproportionately high rate to earnings in the UK, it’s little wonder that households are increasingly reliant on credit to sustain themselves.
According to recent figures, British households spent around £900 more on average than they received in income during 2017, and there’s every chance that this number could increase further this year.
This is creating a higher rate of unsecured debt nationwide, and putting individual credit scores at considerable risk. There are ways to improve your credit score and overcome fiscal challenges.
1. Open a New Line of Credit
This may seem counter-intuitive if you have a poor credit score, but the process of opening manageable lines of credit and engaging in positive transactions can actively boost your score over time.
This is an increasingly viable option, particularly with bad credit loans and cards now being made available on the mass market. In the case of credit cards for bad credit, applicants will typically be awarded a product with a low credit limit but higher interest rate, simplifying the process of making repayments and building a positive score.
We’d recommend taking out a single credit card to begin with, while minimising your spend to create manageable repayments.
Choose your card wisely, paying attention to any options that have been tailored to suit your unique circumstances.
2. Retaining Old or Paid-off Credit Cards
Resist the urge to cancel and destroy old credit cards once they’ve been paid off. While this may be extremely tempting, it shortens your credit history and can reduce your score considerably over time. A longer credit history is extremely beneficial to your score and chances of securing future credit, while it creates a trackable trail for potential lenders to follow.
Keeping these cards active is a good idea, even if you use a single account to pay your monthly Netflix subscription fee in full and on time. This rule even applies if you have multiple, older credit cards, so try to keep these accounts open and active as long as they do not carry extensive or sustained debt.
3. Checking your Credit Report for Errors
While you need to be careful not to subject your credit history to an excessive number of searches over time, it’s good practice to regularly check your score and review your report. This can highlight overlooked errors on your report, which could be contributing to your current situation and negatively impacting your score.
Research suggests that around one in four Brits have errors on their credit report, whether this is a late repayment that has not been removed after six years or a closed account that has not been removed.
Once you’ve noticed these errors, you can begin the process of disputing them, removing the offending data and hopefully improving your credit score.
*This post was sourced for dadvworld.com but I do find this information helpful and wanted to share it with you. We’ve struggled badly with finances in the past and aren’t quite over it yet either.
Thanks for reading,