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One of the things that my parents have always told me, especially when I was at university (which was very wise thinking on their part) was to not get a credit card. Credit cards had therefore become something to be afraid of especially as I didn’t fully understand how to use one. This all changed when we began thinking about getting a place together. Our close friends all said that one of factors that contribute to getting a mortgage is having a good credit score.
But where do you start? I have always been a saver above being a splurger. Now after several months of owning a credit card, I think I have at least some basic knowledge of how to build your credit score.
Get A Credit Card
Obvious point I know. There are ways you can build a credit score without a credit card but getting one is going to be the most beneficial to boosting your score. When searching for a credit card, be sure to use websites like Money Super Market and Compare The Market. These help you tailor your search so that you find a card that suits your needs.
Be cautious of how much a credit card lends you. Normally, when getting a credit card, they will suggest an amount which can be either be lowered or raised. Don’t spend beyond your means and only use it when you really need to as credit cards can also lower your credit score.
A Long Held Bank Account
I hadn’t realised that just having a long held bank account can contribute to a good credit rating. It shows lenders that you are stable and obviously having a bank account helps you manage both your money and making payments on time. Another tip would be to use direct debits where possible on any bills or monthly outgoings. This shows lenders, that you are capable of paying more than just the one payment on time.
Getting A Loan
A quick loan could save the day when you are in a financial situation and are great for when you need money fast. Again, being cautious and aware of loans that you take out is important. At the end of the day, you don’t want to get yourself caught up in multiple loans and being faced with big interest rates on paying back the money you borrowed. Always check the fine print and
Buy Now, Pay Later and Financial Plans
I cannot tell you how much I love these financial plans. They made paying for big items like our sofa and bed, so much easier on the ol’ bank balance. A lot of the bigger commercial companies offer buy now, pay later schemes to help reduce the stress of having to pay such big sums in one go. They also contribute to boosting your credit score if you pay everything off on time and when needed.
Monitor Your Credit Score
Monitoring my credit rating is super beneficial because I’ve noticed what’s caused the rating to drop and raise. I monitor mine through Experian and they also send out monthly reminders when my score has been updated.
The longer you use a credit card, the better your rating will get so don’t get downhearted when you see it drop every now and again. Having got a credit card and done some of these things on this list, it made the process of buying a property less of a hassle and one element of the process that I knew I’d sale through.
Have you got any other tips on improving your credit score? Share the knowledge in the comments below.
Disclaimer – This is a collaborative post with CashLady. All words are my own.