How to Improve your Credit Score

Having a good credit score is very important as it means your more likely to be approved for things such as a mortgage, loans, credit cards etc… as a higher credit score means companies see you as a lower risk.

Improving your credit score isn’t something you can do quickly, it can takes weeks, even months for your good habits to appear on a credit report; so be patient and consistent.

Portadown Credit Union have complied a list of ways you can improve your credit score below:

1. Pay for things monthly- Paying for a phone contract or monthly subscription is a great and easy way to improve your credit score. Meeting these repayments consistently show lenders that your capable of managing your expenditures. This is especially important for young people starting their credit score building journey. This may be difficult for those who like to pay for services in full and perhaps with cash, however in order to build credit history, consider choosing a direct debit payment instead for a while.
   
   
2. Avoid missing payments- Missing payments will negatively impact your credit rating as it shows you struggle to manage your expenditures. Avoid this at all cost. If you do miss a payment, try to repay this ASAP on top of the next repayment.
   
   
3. Avoid applying for credit frequently- Applying for multiple credit cards etc. in a short space of time can be damaging as this may appear to lenders that you are dependent on credit.
   
   
4. Use a credit card for spending- Making use of a credit card you have for spending and paying off in full instead of a debit card can be beneficial as this demonstrates responsibility.
   
   
5. Only borrow what you can afford- Before you choose to borrow, calculate if you can make the repayments every month. If you will scrape by or struggle, then reduce the amount you wish to borrow. Don’t put yourself in the position of potentially falling into arrears.
   
   
6. Keep your credit utilisation low- This means the percentage of your credit limit that is currently being used, e.g. if you have used £1000 of your £1500 credit, you’ll be over 50% borrowed. Experian suggest keeping your credit utilisation below 30%. For the example above (£1500) this would equal to £450.
   
   
7. Be careful with “buy now pay later” companies– Klarna (and similar companies) report missed payments to credit score companies, in addition to how much you have borrowed therefore if you don’t already have the money, don’t use buy now pay later schemes.
   
   
8. Consider a debt consolidation loan- If you have multiple debts, it can be difficult managing these each month, which in turn might lead to unnoticed miss payments. Here at PCU, we offer debt consolidation loans to our members. A consolidation loan is a loan to the value of your current debt with one or more companies. If granted PCU will pay the creditors directly and this will leave you with one loan repayment which is easier to manage. If you’re interested, please phone us on (028) 3833 5104.

Portadown Credit Union- Your local lender of choice