How To Build Your Credit Score

02 February 2020

So, you’ve checked your score and there is room for improvement? You don’t have any defaults and your bills are up to date… so what could have pulled it down? Don’t panic! There are some easy wins to help improve your credit score. Want to know more about what a credit score is? Check out our article ‘What Is My Credit Score & Why Does It Matter?’.

Its important to keep a healthy score to keep your access to credit affordable. Having a good credit score means better interest rates, terms, and options when applying for loans, finance, insurance… the list goes on.

There are a few reasons your score could be lower than you think…. one is that your credit file is thin, you just don’t have enough credit history for a good score. The other, more likely reason is that you have been late paying accounts.

If you pay your power, phone, internet, hire purchases and credit cards late, even by a few days, then your credit score will suffer. But every score is repairable, with a solid plan in place you can soon get your credit score moving in the right direction.

Follow our easy guide below to start seeing your credit score improving.

  1. Get a Credit Builder Loan

You can get access to credit and build your credit score at the same time. This means taking out a loan and making all repayments on time or early. This good repayment data is then reported back to a partner credit bureau. Be careful! Not all lenders care about and offer this positive data reporting so be sure to check before you sign your loan documents. At Save My Bacon, we offer positive credit reporting with the Centrix credit bureau.

Contact our friendly customer team to find out more.

  1. Get a Credit Card

This is especially helpful and a good starting point if you are building your score from scratch. Having a credit card and paying back the balance early, on time and without a late fee proves you are able to manage making bigger purchases within your income stream.

  1. Pay Every Bill On Time

Make sure you pay every bill on time! Find out the exact dates that your various accounts are due and set up automatic payments to ensure the minimum is paid before that day.

It might be that you are paid in a way that is out of sync with those dates. You can either put money aside in a separate account to manage payments on time throughout the month or talk to your providers about changing the day the payments are due.

You will soon see that by paying all your accounts by the due date that your credit score will start to climb, giving you access to cheaper credit.

  1. Make Frequent Payments

Making smaller more frequent payments can often boost your credit score. Making multiple payments throughout the month (often called ‘micropayments’) aids your credit utilisation. If you can keep a lower credit utilisation (see below) then you should see a positive impact on your score.

  1. Avoid applying for multiple credit accounts around the same time

Applying for multiple credit accounts close together can result in a drop in your credit score. Multiple applications can cause damage. Its better to enquire for a larger limit that will suit your financial needs rather than having too many applications on the go.

You can also do a debt consolidation to reduce the number of credit accounts you have which can help to manage your repayments and improve your credit score.

Ask one of our friendly customer team members about our debt consolidation loan.

  1. Find Credit Report Errors & Dispute Them

If your score seems lower than you anticipated, it could be due to a credit file error. A mistake on your credit report could be lowering your score. There could be an incorrect late payment of old data that should no longer be reported.

Dispute these errors to get them removed. Credit bureaus have 20 working days (if a longer time is needed to check the information the credit reporter should notify you of an extended time and explain why) to investigate the mistake and get back to you.

  1. Keep Credit Cards Open

In a rush to improve your credit score? Be aware that closing your credit cards may mean you lose the positive repayment data being sent to the credit companies when you make regular repayments. Keep the card open and use it occasionally making sure to pay back on time!

  1. Be careful when becoming a Guarantor

A family member or significant other may ask you to be guarantor for their home or car purchase. This means you will be responsible for paying back their debt or their arrears if they should be unable to make the payment. This can be dangerous! So be sure if you go guarantor for someone that they can pay their way.

Becoming guarantor and then your guarantee misses payments... this could seriously hinder your credit score. Don’t ruin your own credit record for a debt that was never yours.

We hope you found this article useful and can start improving your credit for a better financial future now! Don’t use this blog as a reason for not paying down debt… The quicker you can clear debt the easier your finances will be in the long run.