Credit score boosting secrets: Crucial for mortgage, credit card, cheap energy bills, mobile & more Credit scoring has become a key part of our financial lives. It impacts if you can get mortgages, bank accounts, contract mobiles, monthly car insurance, credit cards, loans, and even if you can pay energy bills the cheapest way. Even if youre accepted, we live in a rate for risk world, so it then dictates what you pay too. Many people get unstuck by this. They apply for todays record cheap rates, but find theyre charged more. Heres what you need to know... • You DONT have a universal credit rating - theres no blacklist. This is a myth. In the UK, theres no universal credit rating or score, theres no blacklist of banned people. Each lender scores you differently & secretly. Their aim is to see if you match their profitable customer wishlist. A key part is assessing the risk of non-repayment. If thats high, many wont lend; but some specialist lenders will like you more as they can charge you high. Yet even good risks can be rejected, because the lender thinks you wont make it money. Or perhaps youre applying for a credit card, but it wants to cross-sell mortgages, so scores you on how likely you are to get one. To fully understand it, see How Credit Scoring Really Works. • What they know about you: Lenders assess you with 3 key pieces of info: 1) Your application form. Many underrate how crucial this is. It tells them your salary & more. Be consistent on each form, eg, job title, as inconsistencies can trigger rejection via fraud scoring (of course, never lie, thats fraud). 2) Any past dealings with you. A lender youve banked with can interrogate your behaviour far more than others; sometimes good, sometimes not. 3) Your credit reference files. These come from either Equifax, Experian or Callcredit and contain info on the electoral roll, court judgments, what credit applications youve made, products you have and if youve paid on time. Check regularly for errors (see Get Paid To Check Your File below). So find out in full what your credit reference agency knows about you. Many assume things are on there that arent, such as a criminal record or speeding points, so we also list what credit reference agencies dont know. • How to make yourself more attractive. Getting accepted for credit is like going on the pull - like people, different lenders find different things attractive. Theres no universal fix, but some small cosmetic changes generally work for most. These include: a) Get on the electoral roll. If not, getting credits tough. Check if youre on it and apply via About My Vote. If youre not eligible, send proof of residency. b) Stabilitys good. If possible, put a landline, not mobile, on applications. c) Time it right. Problems stay on your file for 6 yrs, applications for 1 yr. So if you can wait until theyve lapsed to apply, it should boost your score. d) Never miss or be late on repayments. Use a direct debit to be sure, even if just for the minimum (then you can repay more on top). e) Dont withdraw cash on credit cards. This is both expensive & evidence of poor money management - avoid. (Withdrawing cash abroad on a credit card - read this.) f) Dont let paid-for credit scores overly worry you. Credit agencies flog em, but theyre blunt tools. See Is Buying My Credit Score Worth It? help. g) Payday loans can kill mortgage applications. Some mortgage underwriters simply wont lend to anyone with payday loans. See our Free First-Time Buyers Mortgage Guide for full help on mortgage acceptance. h) Deal with unfair defaults. Ask the firm that put them there to remove. If not, put a notice on your file & go to the Ombudsman. See Defaults Help. i) Check for address errors. An old, active, but unused mobile phone registered to your old address could even cause a mortgage rejection. For full info on these and more, see 12 Tips To Boost Your Credit Score. • How to (re)build your creditworthiness. Credit scoring aims to predict future behaviour based on your past. Those with a poor history thus do poorly; as do those with little credit history, as then predictings tough. Therefore, the perverse solution is to get credit and use it well. The easy route is a specialist credit rebuild card (otherwise youll be rejected). These have awful APRs. So just do £50ish/mth of normal spending, then repay IN FULL each month, preferably by direct debit so theres no interest (& never withdraw cash). After 6mths or so, things should start to improve. TOP CREDIT (RE)BUILD CARDS Our FREE Eligibility Checker shows which of these cards youve best odds of getting Card Key info Rep APR (1) Cap One Classic Extra* 0.5% cashback + £10 34.9% Aqua Advance* £20 Amazon voucher after 2 mths 34.9% Luma* 0% till Oct 2014 (try to avoid borrowing tho) 35.9% Barclaycard Initial* 3mths 0% (try to avoid borrowing tho) 34.9% (1) You wont pay this if you repay IN FULL each month unless you withdraw cash, which you should avoid. Full info in Credit Rebuild Cards. Official APR Examples If you cant get those, anyone can get the Cashplus Creditbuilder prepaid card. Pay it £5/mth for a year and technically its a loan repayment. Hopefully after a year itll help you get a rebuild card, though itll be at the minimum - you may prefer to just wait until the bad stuff wipes from your file. • Get PAID £19 to check your files. Even small errors on your Experian, Equifax & Callcredit files can kibosh applications, so check all three line by line annually and before key applications, eg, a mortgage. While youll see youve checked it on your file, lenders wont, so it wont impact your score. While youve a legal right to check each file for £2, you can sign up for a months credit monitoring trial, which lets you do it for free (remember to cancel). Better still, sign up via a cashback site and you can earn £10.50 for trialling Experian, £8.92 for Equifax. Full help: Get Paid To Check Credit Files • Ensure you minimise applications - use the MSE Eligibility Checker. The only way to know if youll get a product is to apply. Yet that leaves a footprint on your credit file, and too many of those, especially in a short space of time, can hurt future applications. This is a catch-22, as if you get rejected or the rate youre offered is crap, youll want to keep applying. Ive given evidence to parliamentary select committees on this unfairness, but littles been done. So to fight back, weve built free eligibility checkers. These use a soft search (so you see it on your file, but lenders dont so theres no impact) to show your odds of acceptance for the top cards, so you can hone and minimise your applications. FREE ELIGIBILITY CHECKERS: PREDICT YOUR ODDS FOR EACH CARD 0% Balance Transfer Eligibility Checker - for shifting card debts to cut costs Top card: Barclaycard 32mths 0% for a 2.99% fee Top poor credit deal: Barclaycard 18mths 0% for 2.9% fee 0% Spending Card Eligibility Checker - gets 0% borrowing, clear before 0% ends Top card: Get 18mths 0% at Tesco and Santander Top poor credit deal: Luma 0% on all spending till Oct 2014 Top Cashback Cards Eligibility Checker - repay in FULL and earn as you spend Top card: American Express 5% cashback for 3mths on up to £2k spending; up to 1.25% after Top poor credit deal: Capital One 0.5% cashback on all spending Cheapest Overseas Card Eligibility Checker - repay IN FULL and get unbeatable rates Top card: Halifax Clarity no foreign exchange fee, no fee for cash withdrawals Top poor credit deal: Capital One no foreign exchange fee, though high ATM withdrawal fees For full options & explanation see the guides: Best Balance Transfers, Top 0% Cards, Top Cards Abroad, Top Cashback Cards. See APR Examples. For all these cards, obey the golden rules. 1) Never miss a minimum repayment, or you could lose a deal. 2) Only use the card for the purpose its designed for (eg, dont spend on balance transfer cards, dont borrow on overseas cards). 3) If its a 0% card, clear the debt in full before the 0% ends or the rate jumps. 4) If youre borrowing, always plan & budget for it and minimise the amount. • Beware joint mortgages, loans and bank accounts. Its not whether you kiss, live together, hold hands or are married that links credit files. Its simply whether you have a joint credit agreement (mortgages, loans, bank accounts and sometimes utility bills - joint credit cards dont exist). If youre financially linked to someone, it means their credit history can be looked at when assessing whether to lend to you. So if theirs is bad, avoid any joint products. Plus, if youre now financially independent from an ex, ask credit agencies to de-link you. Find out how to de-link your finances. Good Luck ! Aspect Plus Ltd [email protected]
Posted on: Thu, 05 Jun 2014 13:32:14 +0000
Trending Topics
Recently Viewed Topics
© 2015