A low or bad credit score can have some very serious consequences for an individual. In order to understand the impact that your credit score can have, it is important to first understand exactly what the credit score is a measure of. Essentially, your credit score is a quick way for any lenders or other financial institutions to ascertain how reliable you will be as a borrower. A higher credit score shows that you have had financial dealings in the past and have consistently met your obligations under them, paying back loans on time.

When you apply for a credit card, a mortgage, or a similar product that is dependent upon you paying money at certain times, your credit score will be checked. A low score can mean less favourable terms on a loan, or in some cases outright rejection of your application.

Check Your Score

The first step to improving your credit score is to ascertain what it is now and why. You can request a free credit report online and this will not only tell you your current score, it will also give you the opportunity to rectify any mistakes on your file. It is surprisingly common to find that someone else’s financial dealings have made their way onto your report, especially in cases where they have the same / a similar name to you.

If you find any errors on your report, you should immediately contact the company that provided you with the report, preferably by writing and using a recorded delivery method. Explain what the errors are and include copies (never originals) of any documentation which supports your stance.

Organise Your Payment Times

Making payments on time is crucial to maintaining a good credit score and many banks now offer free payment reminder services where you will receive an e-mail and/or text message when your payments are due. Usually you can customise these alerts so, for example, you can receive a reminder a week before the payment is due and then again three days before. If your bank doesn’t offer this service, your smartphone certainly will.

Not only are there a now a variety of apps that are designed to help individuals manage their time and money better, you can also use your phone’s calendar and alarms in order set up your own customised routine. Where you need to make payments at the same time every month, you can set up automatic payments through your bank.

Reduce Your Debt

This is the hardest part of the process, but also the most essential. Paying off your outstanding debts will very quickly raise your credit score and the sooner you get started, the sooner you can benefit from an improved credit score. Once you’ve established how much debt you have to pay off, you can adjust your spending habits accordingly. Obviously you should avoid taking on any new debt and never fall into the trap of taking out loans in order to pay off other loans. Check out websites for further tips to improve credit score.

Maintaining a high credit score is essential for those who are looking to secure their first credit card or home loan. It is never too early to start working on raising your credit score.


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