How do I Improve my Credit Score?
Improving your credit score is all about having an understanding of what a lender expects from you.
To improve your credit score you need a credit repair plan, which should detail immediate improvements and long term considerations.
Immediate improvements
Improve your credit report. You do not want to let some silly inaccuracy drag down your credit score.
Improve your income to expenditure ratio. This is all about maximising the amount of disposable income that you have, which in turn means you can afford to borrow more. This is attractive to lenders. It can be achieved through income maximisation, which involves reducing expenses by shopping around for utilities, broadband, insurance etc.
Long term considerations
Factors that may have a positive impact on your credit score:
Financial
- A long credit history
- Moderate credit card balances in relation to your income and credit limit
- Good conduct of accounts with the company that you are applying to
- Savings accounts with the company that you are applying to
Personal
- Home ownership
- Marriage
- Long term employment in a stable profession
- High income in relation to your debt and the amount you want to borrow
Factors that may have a negative impact on your credit score:
Financial
- Large number of credit accounts opened in a short space of time
- A large number of credit accounts in use
- A high amount of credit outstanding in relation to your income
- Defaults and missed payments, especially if there are a large number of them and they are recent
Personal
- Low income in relation to your debt and amount you want to borrow
- Unstable Job or short time in job
- Frequent change of address
Am I best applying to my existing lender?
With each application that you make, the lender will pass you through their decision making process. Two main factors determine whether it is an advantage to apply to lenders that you already have accounts with.
- The amount of borrowings you already have with them.
If the lenders exposure to you is considered high, they will be less likely to lend to you. - Your account conduct
If the accounts that you already hold with the lender are being poorly managed, they will be unlikely to lend you more money.
Therefore if you have managed your accounts well and you only have a small amount of borrowing with the lender, there is an increased chance that your application will be successful.
