Another simple way to boost your credit rating
So you’ve taken my advice and joined the electoral role (read part 1 here), you’ve registered at a stable address, you can send and receive post from there, you’re probably thinking “What’s next Jess?!”.
It’s as “easy” as getting a credit card!
Hilariously I thought getting a credit card would be easy, they were practically giving them away to fiscally irresponsible students. Now it’s a little different, I still have my rejection letter from Santander.
There’s a real catch-22 when choosing a credit card. Some credit card companies (which coincidently offer the best benefits) only accept those with a strong track record of repaying debits; and on the other end of the scale are companies like Aqua, that specialise in giving credit cards to people with bad credit scores (and pile ridiculous interest rates on top).
Martin’s Money Saving website has a great tool. I used it to find my beloved M&S credit card. You put in your details and it gives you a list of credit cards you are most likely to be accepted for. I chose M&S because it gave me 15 months of 0% interest and when I spend money it rewards me when M&S vouchers. Although beggars can’t be too choosey it is worth seeing which ones give you the best rewards.
Note: The tool does do a ‘soft search’ on you so don’t use this tool more than you need to. Lenders can’t always see soft searches but as a general rule it is better to have as few as possible.
More does not mean a better credit score
Every time you apply for a credit card, the company does a “hard search” on you. This search stays on your credit score report. If you have too many hard searches, lenders get suspicious and may refuse to lend money to you.
Lenders criteria’s are changing all the time, but when I was applying for credit card property investors advised to not apply for more than two to four credit cards within a six month period.
When you get one REPAY IN FULL EVERY MONTH! If you are bad with money, only use your card for weekly shopping and don’t take it out with you. I set up a direct debit from my bank so I don’t need to worry about remembering to pay it off each month. If you miss a payment or are late in paying, it negatively affects your credit score.
BE ANAL ABOUT YOUR CREDIT CARD PAYMENT DATES! Set reminders a week in advance, put reminder post it’s in your room…or simply set up a direct debit.
Now get cracking!
To summarise, your job is to convince lenders you are a safe and stable lending risk. You do this by creating a good traceable track record lenders have access to. This track record consists of having a stable location and repaying debit.