15 Tips for improving your credit score

If you have been denied credit, a mobile phone
contract or an application for a bank account it is normally due to having a
particularly low credit score. Repairing a credit score is a long term process
but is undoubtably worth the hassle as it can make financial transactions less
painful and future borrowing less expensive.

Here are some tips that will help you get started.

1. Review your credit report and check for errors.
More often than not there are one or two mistakes that can be corrected
provided you have the supporting documents. By bringing up these issues with
the credit report company and going through the investigation process to get
them removed you can rapidly improve your credit score

2. Ensure your personal details are correct. Making
sure your address and contact information are up to date as well other details
such as your marital status and employment is vital to maintaining a good
credit score. Most importantly ensure you are registered to vote at your
current address - credit reference agencies will check the details you provide
against the electoral roll and if you are not on it you will severely affect
your ability to get credit

3. If you are refused for credit do not look
elsewhere - first check your credit report, fix any errors and work to
improve your credit score. Each application denial is recorded on your report
and many applications in a short space of time - or worse still a succession
of denials - count against you. If you have already made multiple unsuccessful
applications then you will need to wait six to nine months before applying
again so they do not prejudice your application - and in the meantime you
should continue to work to improve your credit score.

1. If you have more than one credit card or loan
   always make sure you pay off the one with the highest interest rate first
   (while ensuring you meet minimum payments on the others). Once you have paid
   off the card with the highest interest rate close the account and move onto
   the next
   
2. Wherever possible try to move your debt from
   high interest accounts to lower interest - for example an overdraft can often
   charge as much as double the interest of a credit card, and a 'reward' or
   'affinity' card will often charge a much higher level of interest than a
   standard, no frills credit card.
   
   3. Avoid store cards at all costs - they charge
   punitive levels of interest. If you have store cards and are unable to repay
   them immediately, at least try to shift the debt to other cheaper forms of
   borrowing
   
3. Stop Saving - although saving should certainly
   be encouraged when your debts are managemable, recent rate cuts make it highly
   unlikely you will earn more in interest from savings than you will pay on your
   credit card debts - use a savings
   calculator to check. Using your savings
   to clear your highest interest rate borrowing is a wise financial move while
   will enable you to save more in the longer term. Check for forgotten accounts
   such as inheritance given when you were a child as these can be a fast way of
   clearing your debts and moving to financial freedom
   
4. It is too easy to use your credit card to pay
   for everything. To cut down on your credit card debts you need to break this
   habit - try not to spend anything on your credit card if you can, or limit
   yourself to food shopping and other essentials. If you're not heading to the
   supermarket, leave your credit card at home!
   
5. To ensure you have more money to meet your
   repayments you should stop spending money on things that you don’t really
   need. These include gadgets, clothes, drinking, eating out, shiny shoes and
   cinema tickets. You may miss them for at first but it need only be a temporary
   measure; when your finances improve you can enjoy them again.. in moderation!
   
6. Always meet your minimum repayments - there is
   no sense in paying off one card while incurring charges on another for missed
   payments. Your bank can help you set up a direct debit to simplify this
   process
   
7. Look for ways to enjoy staying in instead of
   going out. Inviting friends over for dinner can be a great way to save money
   on eating out or going to the pub, and watching a DVD or playing a board game
   with your loved one(s) will always work out cheaper than a trip to the cinema.
   Buy a good cookbook and cut down on takeaways. Sexy underwear and candles can
   also make for a great night in!
   
8. Check your bank statements for any monthly
   payments you make for non-essential services as these will seriously affect
   your ability to repay your debts. Often we sign up for frivolous services such
   as monthly DVD rentals or cable TV we rarely use - closing your account for
   these services can free up significant extra cash to help you meet your
   repayments. If you think a service is essential - your mobile phone contract,
   for instance - then try to renegotiate your contract onto a cheaper monthly
   plan, and opt to text friends and families rather than call them to save more.
   
9. To come up with the extra money you need to
   repay your outstanding debts try working overtime, getting a second job if it
   is possible and sell stuff that you don’t need.
   
10. Speak to your creditors and explain your
    financial situation and how you plan to remedy it - often the fact you are
    showing willing will lead to assistance and advice in meeting your repayments
    
11. As things improve, close your unused accounts
    especially the newer ones. You can also apply for a new credit cards offering
    lower interest rates than your current ones. Where possible opt for cards with
    a low or zero balance transfer rate (be wary of transfer fees - these can
    often significantly reduce the benefit) for an 'interest rate holiday' to
    increase the speed you can pay off the debt and endeavour to pay off the new
    cards as soon as possible

Improving your credit score is vital if you score
is below 700. Doing so will enable you to demand better rates from banks and
other lending institutions when you want to buy a house, a car or undergo
renovations at home.

Although it may take some small sacrifices to
improve your credit rating it is certainly worth the effort. With a bit of
practice these steps will become natural - it is certainly possible to live very
happily while living frugally, it just takes a bit of
creativity.