Thursday, 28 February 2013

MARCH 2013 YOURBUDGETORYOURLIFE How To Improve Your Credit Score

Welcome to the second month of my financial blog, I’ve decided to do it monthly as this fits in better to the way I budget, and to the way my wages are paid, I know some people are paid weekly, and you can still apply my blog to that, but mine are monthly, plus it means you only do 12 budgets in a year rather than 52! So that’s got to be better!J Saving time as well as money, and not getting confused with too many numbers!

This month I’m going to be talking about (among other things) improving your credit score. Your credit score is what companies look at to see if you are “an acceptable risk” (in the financial sense) or not. Here is a quick rundown of how to improve it.

1- Take out a credit card, but only use it for small amounts about once or twice a month. AND PAY IT OFF IN FULL WITHIN THE WEEK. DO NOT LET IT ACCUMULATE! Look for a credit card which does not charge interest for a certain period after purchases. RBS for example is 56 days before an interest charge is incurred. When you do this it goes on your credit score and it shows lenders that you are an acceptable risk as you pay money back when it is lent to you.

2- Have an overdraft facility on your bank account (if your bank account charges you for simply having one then change your bank account) and DONT USE IT. It goes on your credit score and shows lenders that you can be trusted with money lending facilities.

3- Shop around for a mobile phone contract, and get it as cheaply as possible for your specific needs, and then pay the amount owed without fail every month, its that simple. Even if it’s a sim only contract, it shows lenders that you can be trusted with paying a specific amount every month.

4- Use debit card instead of cash at least occasionally, this is for two reasons, 1 it shows lenders that you can be trusted to use money from your account without taking out a physical amount in cash, it shows you are savvy about your money. The second reason this is good is that if you lift £10 then the physical cash is with you, and it is easily spent, or put into a jar for months, till it gets put back into your current account. Why not skip the middle man and keep the change in your current account? It helps more than you would think!

5- Take out a small loan NO NOT WITH A PAYDAY LENDER, ARE YOU NUTS?? Its 1792% APR!! I mean with your bank or building society, again, check the small print and terms, and pay it back very very quickly indeed! Avoiding incurring any interest charges if you can.

A good credit score is ESSENTIAL for making a “large purchase” such as a house or a car (I don’t agree with taking loans out on cars, buy second-hand people! But that’s a different story for a different day, and not everyone can) because let’s face it, no one is going to lend a large sum of money to someone they can’t trust financially! Do this for a short while and soon (it is possible because I did it using these exact methods) you will have a credit score of 999 the best you can get! This opens A LOT of doors for you, mortgages are suddenly attainable, and in these economic times, that is something that is VERY desirable, both for yourself, and for the lenders! My other advice where these things are concerned are READ THE SMALL PRINT, TAKE YOUR TIME!