Five Things You Didn't Know Can Hurt Your Credit Rating

It’s tough to get credit these days. As the UK continues to recover from a recession whilst simultaneously looking to decrease the nation’s deficit, it has become increasingly difficult to obtain credit.

Banks and stores have become hesitant to lend money unless they are guaranteed to receive it back with interest. To be included in this elusive group of ‘approved’ borrowers, you need a good credit score.

However, most people don’t realise they could make improvements until they are turned down. Here are five things you should look at that could be hurting your ability to borrow.

1. Paying as you go

If you already know that you’ll be making regular payments towards something, why not set up a Direct Debit? It’s so easy to forget to manually transfer money, and most banks will throw in an additional charge if you make a late payment – so don’t risk it. It’s easy to assume that the payment method doesn’t count for much but a Direct Debit can assure a company that they will be receiving consistent payments. This can show lenders that you are a responsible borrower and your credit score should be improved as a result.

2. Ignoring your voting rights

Perhaps you’re not as politically motivated as some other members of your community, but that doesn’t mean you can completely ignore the electoral roll. If you aren’t registered to vote, you are damaging your credit rating. Even if you have no intention of voting, by registering with the electoral roll, you are indirectly clarifying yourself as a steady member of the community. Neglecting this gives the impression that you are not loyal to your home and perhaps not devoted to your finances either.

3. Downsizing

When you consistently fall behind on household bills, it may be tempting to downsize your home, but unless you really have to, try and avoid it. The longer you live in a property the better your score is – and it’s also the case for steady employment too.  Try reducing your mortgage payments is possible and switching to cheaper utility tariffs. Moving often doesn’t look great on your record and it should be a last resort if you’re struggling financially.

4. Ignoring your partner’s credit score

You may be the one that is ‘good with money’ in your home, but if your spouse, your own credit score could be penalised for the association. In fact, this is the case for anyone who you are financially linked to. If you enter into a contract with someone else, ensure that both of you make efforts to improve your credit rating. On the other side of the coin, if you part ways, alert your creditors immediately and this may boost your score.

5. Check your details

Is your address correct? A simple typo could utterly destroy your credit rating by accidently being lumbered with someone else’s poor payment record. Likewise, be sure to update your records as and when needed. If you are a newly married bride for example, change your name as soon as possible and alert your banks. This will ensure your records remain the same and you aren’t penalised for going off their radar under your old name.