Think of your credit score as being an indicator of how worthy you are for obtaining credit. It also highlights your current financial situation and can make all of the difference between getting the credit that you need when you need it or being refused everywhere that you turn. While no to credit scoring agencies are the same, those who have bad credit on one, such as Experian will also most likely have a poor credit score on another, such as Equifax. Understanding how your credit score can be negatively impacted can go a long way in helping you keep it positive. If you are searching for a payday loan or a short-term loan and are worried about your credit score and the impact that it may have on any applications, this guide put together by Sure Money UK should help clear up any confusions.
So, if you are ready to discover some of the common pitfalls that result in a negative credit score, let's get started.
Get yourself on the Electoral roll
If you are looking for a way to instantly improve your overall credit score, simply registering on the Electoral roll with your local Council will help. If you are not already on the Electoral roll, then it is difficult to confirm the validity and genuineness of your identity. One of the biggest mistakes that people make when it comes to their credit report is to not be registered.
While you may not be interested in taking part in local and general elections, the electoral roll goes a long way with improving your credit score. If you currently have a poor credit score, you can potentially take yourself from poor to average in a matter of weeks and without needing to rush around trying to make payments for past defaults.
Reduce the amount of available credit that you have
The old saying that too much of a good thing can be bad for you is true when it comes to your credit report. If you have lots of different store cards and credit cards, you become seen as a potential risk due to a large amount of money being available to you. As an example, if you have several credit cards with several thousand pounds of unused credit on them, lenders are far less likely to offer you credit and this can negatively impact your credit score.
While you may assume that having thousands of pounds available to you on store cards and credit cards would be beneficial to your credit report, the opposite is true. For a start, as noted above, you could potentially spend all of the available credit and place yourself in financial difficulty, making it difficult to repay any further credit that you may acquire. Secondly, financial lenders make their money from customers using the credit given to them. If a customer is given credit and they do not use it, then it is not earning the company any money. A surefire way to improve your credit score is by cancelling and closing any cards that you do not use on a regular basis.
Don't apply for too much credit too often
Every time that you apply for credit, regardless of whether you're approved or not will result in a hard search footprint being left on your credit report. These footprints are registered when a credit provider reviews or visits your account. A footprint will stay on your credit report for 12 months before being removed, and a maximum of 12 footprints each year will help keep your credit report in good standing. A soft footprint is typically performed when using calculators to evaluate your eligibility for a short-term loan or payday loan and vanish from your credit report immediately.
Unfortunately, not many people understand the impact that a hard search has on your credit report and when the application for credit from one lender is refused, they immediately try another, which can result in several footprints being registered. This can make you look undesirable to lenders due to the number of refusals that you have received, along with looking too desperate for money.
Now you know of the three most common mistakes that people make that result in a low credit score, you can actively take steps to improve it quickly and efficiently.