There are many things that people say should be taught in schools. Arguably one of the most common refrains, when this argument is brought up, is economics; many advocates believe that economic know-how should be part of the academic curriculum.
It’s hard to disagree with them when it comes to credit rating; it’s one of the most important figures you can possibly know about yourself, but methods for accessing it aren’t immediately obvious, so it can be easy to coast through life without even knowing what your credit score is.
Thankfully, there are sites out there, like Experian or Credit Karma, that can help you check your credit score for free. Once you know what it is, there’s a chance you may need to boost it, as your credit score can affect applications for everything from loans to mortgages and even new jobs. Here are the best ways to boost your credit rating.
Borrow and payback
We’d only recommend doing this if you know you’re capable of making regular repayments, but one surprising way to boost your credit rating is to borrow money and then make repayments on it. Lenders like to see that you’re financially solvent enough to make repayments, and they can’t see that if you haven’t recently taken out a loan, so it might sound paradoxical, but a loan might be your best bet. If you’re struggling with a low score, don’t worry; many of the very bad credit loans direct lenders can give you are tailor-made for this purpose.
Put yourself on the electoral register
Sometimes, due to a quirk of the system, you may find that you’re not on the electoral register as you should be. Adding yourself to this register quickly can boost your credit score because lenders can see that you’re a citizen and your details are publicly available. Many lenders use the electoral register to check the information that you’ve given them, and if your info isn’t on the register, then it’s more difficult for them to do this. The easier you make a life for lenders, the better your credit score is likely to be as you move through life.
Pay outstanding debts
It might sound obvious – and you might not be in a position to do this – but paying your outstanding debts is a good way to boost your credit rating. Lenders will naturally be more reticent to give you a loan if you’ve already got many loans on your account that remain unpaid. If you’re not in a position to pay your outstanding debts right now, then it might be a good idea to consider holding off on applying for another loan, but if you can make more repayments on outstanding loans or other debts, then make sure to do that before applying for a new one.
Try a credit-builder loan
You may have heard of credit-building loans or cards during your financial travels. If you haven’t, here’s a quick primer. Credit-building loans specifically exist to help you build credit, as the name suggests. They don’t always release the money to you as soon as you take out the loan; rather, they often require you to make repayments prior to accessing the amount granted in the loan. This can help you to build up a credit score if yours is poor or largely nonexistent. Make sure to check with your lender for the terms of your credit-building loan, as these terms can vary quite a lot between lenders.
Holding a joint account or being closely financially associated with someone who’s struggling with a poor credit score can stand you in worse stead as well. It might feel cruel at the moment, but one way to boost your credit score is to open a solo account instead. Make sure to talk to the person with whom you have the joint account so you can keep them in the loop, of course. It will almost certainly financially benefit both you and them to get better access to loans in the future, so make sure there isn’t anything holding you back when it comes to your credit score.
Don’t hit your credit limit
Of course, if you’re applying for a loan, then the chances are you need it for some reason and aren’t just doing so frivolously. Paradoxically, though, one of the best ways to boost your credit rating is to show lenders that you don’t need loans; keeping your credit utilization low shows that you’re not in financial difficulties and don’t need to hit your credit limit over and over again. You can do this by avoiding credit cards altogether, of course, but if you must resort to credit, try asking your credit company if you can raise your limit or make more regular repayments if you can.
Be vigilant for fraud
Obviously, you should always be vigilant for fraud, but this is particularly relevant when it comes to keeping your credit score high. Fraud can have a seriously deleterious impact on your credit score; if fraudsters manage to get hold of your financial information and go on damaging spending sprees, credit companies might not know that this is an act of fraud. If you do happen to be the victim of credit card fraud, the best thing to do is immediately inform your credit card provider and anyone with whom the fraudster has spent money. Keeping everyone informed is the best way to minimize damage in this situation.