QUICK GUIDE TO BUILDING GOOD CREDIT

Written by Laura Allen - Client Manager Walter Dawson & Son

The cost-of-living crisis is highlighting the importance of having a hand on your finances and a poor credit score can have a huge impact on your lending position, which isn’t a great place to be in at all.

?This could mean you miss out on the best credit card deals, loans, phone contracts and mortgages or at worst be rejected for credit altogether!

?But what is a credit score?

In simple terms, it is a 3-digit number that is designed to represent the likelihood that you will pay your bills on time.

Why is a Credit Score important?

If you wish to borrow money, your credit score is used by lenders when deciding to accept your application or not. The better your score, the more likely you are to have your application for a loan or even a credit card accepted. A low credit score may mean that your application is still accepted but you will have higher rates of interest.

How is a Credit Score calculated?

It is a points system based on how you have managed your debts and bills in the past. Paying your bills on time will have had a positive impact but a history of missed or late payments will have a negative impact.

Here are 4 quick tips to improve your credit score

• ?Ensure you are registered to vote – lenders use the electoral register as a way of confirming your identity.
• Pay all bills on time – set up direct debits where possible so payments are harder to miss
• Check your credit report – errors can happen so check your report to make sure there aren’t any on yours that are affecting your score
• Do not withdraw cash on credit cards - lenders may assume that this is because you don’t have cash in your bank, and even if this is not the case it could still negatively impact your score.