4 Ways You Can Improve Your Credit Score

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By Dzhingarov

Your credit rating is the first thing any lender or broker will look at before qualifying you for a personal loan or car finance. Your credit rating score will also have an impact on how much money you will be able to borrow. Ideally you want to keep your credit score as clean as possible, so here are three practical tips that will help you achieve and maintain a higher credit rating:


  1. Keep a permanent address – This will help in gaining credibility and stability in the eyes of any potential lender. Lenders tend to avoid lending money to individuals who are constantly changing their home address. They look for people who are in a stable situation, ideally you should have the same address for three or more years. If this isn’t an option for you, you might want to consider using a relative’s address instead. Use a permanent address for your bank account, credit card, work contract, tax returns, electoral poll, etc.
  2. Pay-off existing debts – If you have missed any of your credit card payments or existing loan repayments this will have a negative effect on your credit rating. This also creates “alarm bells” for any potential lenders as they will assume you might encounter difficulties paying them back, if they ever lend you any cash. If you do have outstanding debts or credit cards then you will want to pay them off as soon as possible. Easier said than done – I know! So try and reduce your monthly expenses, sell any assets you may not need or use anymore, consider getting a part-time job to generate some extra income. Maybe rent a room out if you own your own property?

    By 401(K) 2012 under
    By 401(K) 2012 under CC BY-SA 2.0 license
  3. Built a track-record – If you don’t have any outstanding debts you are already in a good position. But this might also mean that you don’t have enough credit history or background which might not appeal to lenders as they cannot see if you are able to manage debt. Consider applying for a credit card with a small credit limit and make some simple purchases that you know you can pay-off. This will give you a clean credit history and convince banks and lenders that you can manage to pay back your debts and establish credibility.
  4. Don’t exceed your credit applications – If you don’t have a strong credit rating then there is a high probability that you will get denied by the bank or credit lender. This will automatically lower your rating on a temporary basis (between 3 to 6 months). But if you apply again in that period then you are doubling your chances of being denied as your previous rejection will appear on your credit history, and you just end up spiralling down from there onwards. If you do decide to apply for credit check your credit rating online before you do so (if you live in the UK you can go to Experian.co.uk). You will be able to see your credit score and make a realistic decision on how much lenders would be willing to lend you and avoid getting rejected.
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