Building credit reputation in the modern age, when everyone from the typical household community is struggling to manage even the routine monthly expenses, is a tedious task. Keeping good credit score above the average needs strong financial management for the years; also, it needs diligence. The majority of UK households getting fixed monthly income with the sense of instability and insecurity are worried for poor credit score; sometimes it happens by mistakes because of funds shortage while sometimes it happens because of lack of knowledge. Whatsoever type of financial help is required, the lenders essentially check the credit score. The low credit score makes the loan costlier as well as it leaves the borrower with fewer options for choosing the best lender. As of today, borrowing has become an everyday necessity; therefore, you must know all the factors that can destroy your credit rating.
10 Factors That Harm Credit Ranking:
- Any late payment irrespective to amount dents the credit score. Each late fee more than 30 days is notified to a credit bureau. The new payment remark stays on credit report for six to seven years.
- Accepting the privilege cards of major brands allowing making purchases with the facility of paying later hurts the credit report. Having more than 2-3 shopping credit cards from all the brands affects the credit score. Applying for multiple credit cards in a short period drops the credit rating.
- If you delay even the small payment like of £ 50, the failure is reported to the credit bureau, and you are sure to hurt credit ranking. Holding dues by habit is terrible.
- The short-term financial crisis forces to use maximum limit of credit cards. The higher credit cards utilisation ratio, more than 50%, harms the credit rating.
- Revolving debt is the outcome of an unsecured line of credit. In most cases, the revolving debt arises because of unmanaged use of credit cards.
- Using only one significant debt for over the years lowers the credit ranking. Getting small debts from different agencies and paying them all on time improves credit report.
- Closing multiple cards swiftly dents the credit ranking, as, it indicates something unusual at your finances.
- All the liens, judgments and pending taxes are reported to credit bureaus, and each entry negatively impacts the credit score.
- Defaulting on mortgage loan demolishes the credit score. The pending dues make the credit ranking poorer. Foreclosure also hurts the borrower’s image.
- Co-Signing someone’s debt may also harm the credit score if the borrower fails to repay on time because the pending dues become your liability that is reported to the credit bureau.
How to improve credit score swiftly- Six Effective Tricks:
OK, you are well aware of having a poor credit score, and you still need to borrow. The following six tricks may help you improve credit score swiftly within 30 days:
- According to statistics, a borrower having 680 credit score has typically revolving balance of 40%-50% of all the credit card limits while the borrower having 780 credit score has a revolving balance of 15%-25% of all the credit card limits. Therefore, you can improve credit score by ‘100’ by paying the 30% of the revolving balance.
- 30 days late payment drops the credit score up to 60 – 80 points while 90 days late payment drops the credit score up to 70 – 90 points. Removing late payment takes persistence. The most effective way to remove the new payment entry is to call the creditor and settle the amount by negotiating it to pay in instalments through automatic funds transfer method. If you find any incorrect late payment entry, you can file a case to correct an inaccuracy.
- Removing collection account is an effective way to improve credit score. Generally, people having 780 credit score don’t know collection account. Paying the collection in full may not help you; instead, negotiate for “pay for delete” with a collector.
- Raising credit limits is a simple way to improve credit score swiftly. Call the credit card agencies to raise the credit limits with a soft pull inquiry because soft inquiry doesn’t reflect on credit history. The increased credit cards limit to lower the revolving balances immediately even without requiring you to pay the balance.
- Charging a small amount to inactive credit cards is an excellent tactic to improve credit score. Most often, we don’t use old cards after getting the new cards. If the old credit cards are not used in the last 6 months and have no balance, charge some amount. Charging small amounts to all the credit cards delivers the advantage of credit mix.
- Having no credit record also goes against you as the borrower. You need some credit accounts to be reported at credit report to improve the credit score. As a promising borrower, you must have at least one revolving account being used for 6 months. Getting associated with someone having good credit history as a co-signer is also an excellent way to positively influent credit history while you need to pay nothing; however, it makes you equally responsible for repayments in case the primary borrower fails to repay.
Sensing the growing need of credit score repairing of the UK people having no funds to pay off all the dues immediately, some credit repair companies are emerging fast. The role of these agencies is to guide the client for credit score improvement but at a charge. To avoid this cost pressure, better you focus on repaying the debts with set priority. Clear the small revolving debts first than managing a large amount of debt because the numbers of mortgages also affect the credit score. The change in credit cards usage pattern may also help you improve your credit score even if you are tight with money.
Facing financial difficulties in unstable economic and political conditions of the UK is very common for the fixed income households. Maintaining a healthy credit score may be a challenge, but it is definitely a doable task if you are determined to change the paying and finance reviewing habits.