The New Year brings with it an opportunity to start afresh. Whether it’s trying to cut down on your drinking, promising yourself that you really will start using that gym membership that has been collecting more dust than calories, or trying to make a big change in your working life, the new year and the new decade is ripe with opportunities.
Many people will be seeing the new year as an opportunity to get their finances in shape. Some will be looking to spend less, save more money, so they can finally afford that dream holiday or house deposit.
Others will want to be earning more money, so will look at ways to make a quick buck. But for the savvy financial mind, improving your Credit Score should be the number one priority.
When it comes to finances, your credit score is one of the most important things, up there with savings and income.
Your credit score will open and close a lot of doors to different financial products, depending on the rating you have.
So, you might want to look at changing your rating in the new year. If so, here’s our guide on how to transform your credit score in 2020.
For those who aren’t aware, your credit score is a rating given by UK credit agencies that evaluate how good you are at managing your finances.
It looks at how you have coped with Credit Agreements in the past, whether you have a history of missing payments, any defaults, any CCJs (county court judgements) and any bankruptcies. The credit agencies use these to give yourself a credit score.
The exact value depends on the company, but it normally translates to one of five ratings: Excellent, Good, Average, Poor, Bad.
The first step to improving your credit score is to find out exactly what it is. You have a few options when it comes to working out your current rating.
While most companies provide this service for free, you should always check this first.
Whichever option you go for, you’ll have a good idea of what your credit rating is. If it’s anything below excellent, then there are steps you can take to start improving the score.
If you have a history of borrowing money responsibly and paying it back on time, this will have a positive impact on your credit score. However, if you miss any payments or default on your loan this can be damaging.
If you’re struggling to repay your debt, you should seek help from a free money advice service, and they can help you get your payments back on track.
Your credit score is also assessed based on your traceability. One of the easiest ways to improve this is by signing up to the electoral register.
If you’re on the electoral roll, it’s easier for credit agencies to track your address history. And the more information they have on you, the more favourable they’ll look towards your credit application.
One of the best ways to improve your credit rating is by taking out a credit card and using it for small purchases that you immediately pay off.
This is often known as a ‘credit-builder’ card and is one of the simplest ways to demonstrate how reliable a prospect you may be when it comes to a finance package.
It really is important that you pay off any money you spend on this card, as if you miss any payments or end up accruing too much debt, then you might end up having a negative effect on your credit rating.
If you have a relatively small monthly expense, like the petrol for your car, using the card to make these payments and then immediately clearing the debt is ideal. Just make sure you aren’t spending money that you don’t have.
The best credit packages are available to those with the good or excellent credit ratings. But that doesn’t mean you can’t get a deal with a lower rating.
What you will need to consider is that the cost of the credit will be more expensive, i.e. higher interest payments.
If you are in a better financial position and more capable of managing your finances, then you may still want to go ahead for one of these finance packages. Otherwise, take the time you need to improve your credit score and increase your credit rating.
If you want to check your eligibility without impacting your credit score, simply Apply Online Today and a customer consultant will be in touch to discuss your finance options. Alternatively, work out your budget with our quick and easy Car Finance Calculator.