Thinking of applying for credit? Whether it’s your first time ever or your first time since a previous credit disaster, you need to make sure your credit score is in the best state possible.
To understand why this matters, I’m going to ask you to imagine you were a contestant on Big Brother a few years ago (stay with me). For a month, everything you said and did in that house was caught on camera.
Even though the series has finished, if someone wants to find out what you got up to in the house, they can do easily (and we think almost every former housemate has done something they’d rather forget).
So, if you’re now embarking on a new chapter - like a new job or love interest – what impact will your past antics have on this?
What’s that got to do with my credit score?
Your credit history is a bit like the financial equivalent of the Big Brother cameras. Every new credit agreement you sign up to is recorded, and any new lenders you apply to can see how well you’ve managed this credit.
If you’re late with a payment, think of it as the equivalent of an angry drunken rant – it may make lenders think twice. A missed payment is like throwing a table through the patio doors and escaping over the roof – it’ll certainly make them think twice.
So, just as there’s several things to avoid if you don’t want to end up on the list of the most notorious reality TV stars of all time, there’re also plenty of mistakes to avoid when it comes to your credit history.
Here’s just five:
1 Don’t live in your overdraft
You might not view it as credit, but that’s exactly what it is. Living in your overdraft, especially if you have ever gone over your authorised limit, may set alarm bells ringing for lenders – so get back to black as soon as you can.
2 Update your details
Moved house and not told your lender? Let them know now! Not having your current details on your credit history can send the wrong message to future lenders, so stay on top of this.
3 Don’t miss bill payments
It’s not only missed repayments that can damage your credit score. Even if you’ve never borrowed, certain agreements will show on your credit history, like mobile phone contracts, insurance and some utility bills (depending on your provider). Never miss a payment and always pay on time.
4 Don’t go crazy applying
Each application for credit you make leaves a mark on your credit history, and lots of marks close together can make you look desperate to borrow – hardly the most attractive quality to lenders! Search for the products that are right for you and keep your applications to a minimum.
5 Forget to check
If you don’t check your credit history, you have no real way of knowing if there’s anything nasty lurking that could stand against you. Find out how to check for free here.
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