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Journey to a better credit score

Whether you're looking to get a mortgage, a loan or a credit card, a good credit score is likely to increase your chances of being accepted as well as getting a good deal. Here are some simple Dos and Don'ts to guide you in the right direction.

Do register to vote

Get yourself on the electoral register as lenders will use this to check your name, address and where you've lived before. Lenders need to confirm these details before offering credit, so if you're not registered it could cause a delay or result in your application being turned down.

Do have regular check-ups

Lenders will use your credit report to calculate your credit score so it's worth checking your report to make sure there are no late payments that you don't recognise, and the amounts owed for all your accounts are correct. You can get a copy of your credit report from companies such as Experian or Equifax.

Do get started early

Lenders want to see a track record of responsible borrowing. The earlier you start to build up a good credit history, the more past information lenders have access to, and the more likely they will provide you with a good deal. If you don't have a credit history, you might find it difficult to obtain credit as lenders will have very little to base their decision on.

Do cancel any cards you don't use

Credit card companies won't just look at how much debt you have but also the amount you could potentially borrow. If you have a credit limit of £3,000 on a new, unused credit card, lenders may worry that you might spend it all at once.

It's better to cancel a newly opened credit card than one you've had for a long time with a good history

Do rebuild your credit

If you want to build up your credit history, taking out a small amount of credit could help as long as you manage it well. A current account overdraft or credit building credit card with a low limit can be easier to get accepted for, but can show lenders that you're able to make payments on time and stay within credit limits. If you take out a credit card, try to limit your spending and repay the balance in full every month - that way you'll avoid paying interest.

Do pay on time

Show lenders that you're a responsible borrower by always paying your credit card bills on time. Set up a direct debit to pay off the minimum amount each month to ensure that you don't miss a payment.

Don't keep moving home

Moving home

Moving home can be expensive, so lenders might take this into account when considering your ability to pay. They may also think that you could move and accidentally miss a payment.

Don't be a late payer

Lenders want to know that they can rely on you to make regular payments. A missed payment is likely to negatively affect your credit score so be sure to keep on top of your payments.

Your payment history in the last 12 months will be the most important to lenders. So if you've missed payments in the past but have since become more reliable, your credit score might not be affected as much as you might think.

Don't make multiple applications simultaneously

Too many applications could indicate that you're struggling for money. If you just want to compare rates, ask your lender to do a 'quotation search' instead of a 'credit application search'.

Don't go over your limit

Spending near your limit every month is going to give the impression that you're struggling to manage your finances. Instead, aim for around 30% utilisation. For example, if you have a £1,000 limit, aim to spend around £300 per month.

Lenders like to see that you're good at managing your money

Don't regularly draw cash on your credit card

Repeatedly drawing cash on your credit card could affect your credit score, as it suggests you're unable to get money from elsewhere. It can also be expensive as you'll usually pay a cash withdrawal fee and a higher rate of interest if you use your credit card in this way.

Don't use credit repair companies

They can be expensive - and they're not able to do anything you can't do yourself, often for free. There are plenty of good things you can do improve your credit score, but it will take time.

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