Top Tips to Establishing a Good Credit Score in 2014

Many use the New Year as a chance to reflect on the past 12 months and focus their efforts on one aspect of their life that they’d like to change. Some choose to start a new diet or exercise routine, some look to get their finance in shape while others decide to quit their job and start looking for a new one.

One thing that rarely enters people’s thoughts as far as New Year’s resolution is concerned is credit rating. However, having a good credit rating is priceless in today’s world as it can actually save you money. By getting access to the best rate loans, mortgages and credit cards you’ll essentially save on repayments and reduce your total cost of credit.

Throughout this article we are going to discuss how you can improve your credit rating over the next 12 months.

Credit Score

1. Find out where you stand

Before you do anything you need to check your credit file to see where you currently stand. This not only gives you the chance to look for any errors but it also gives you the benchmark to improve on. Contrary to popular belief, checking your own credit file does not have any effect on your credit score.

You can check your credit file by registering for a 30 day free trial with one of the major credit reference agencies. If you do notice any errors then you need to get in contact with the agency and get them rectified.


2. Establish some credit

One myth regarding credit history is ‘I’ve never had any credit therefore my score must be perfect’, this isn’t true. Lenders use your credit history to predict your future repayment behaviour, therefore if you have no credit history then they’ve got nothing to base their predictions on, and will therefore decline the application.

For this reason many are put off applying for credit and therefore never give themselves the chance to establish a good credit score. This shouldn’t be the case; there are some products out there that are specifically designed to help you improve your credit score, it’s just about knowing which ones to apply for. Credit builder cards are a great option, simply use them a handful of times a month, stay well away from the credit limit and repay the balance in full at the end of each month. Alternatively you could get a bad credit loan such as a guarantor loan but this is likely to be a more expensive option.

Good Credit Score

3. Set up direct debits

Missing payments will damage your credit score which is why you need to do everything in your power to avoid them. The best way to ensure that you never risk missing payments is to set up a monthly direct debit for at least the minimum payment amount (although preferably the full outstanding balance). Setting the direct debit up just after your payday will ensure that you always have sufficient funds in your accountto afford the bill.

Having consistently paid your credit card or loan for a few months the chances are your credit score will start to improve. In order to check that this is the case, get access to your credit file again and compare your current score to the one you had a few months previous.

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