Improving your credit score to achieve the things you want

All good things are difficult to achieve – or so the saying goes – and this is especially true if you don’t have the right financial foundations to build from. While you might already know that your credit score is a vital part of getting a mortgage or being approved for a loan, there are parts of your life it could affect that aren’t such common knowledge. Indeed, having a good credit score improves your chances of securing that dream job, getting the car you’ve had your eye on and even helps you get the latest phone contract, among other things.

This is because it tells lenders, employers and other relevant decision makers that you make smart decisions and are a stable prospect for lending or employment. Even if your score isn’t a good one, demonstrating that you’re taking steps to improve it can help to build your financial health in the eyes of lenders.

However, research from consumer group Which? has shown that 53 per cent of British households don’t check their credit score, meaning over half of people in the UK have no idea if they’re financially sound.

Your goals and your credit score

Our handy infographic ’10 Reasons Why You Should Check Your Free Credit Report’ demonstrates all of the different ways your credit score helps you through many of life’s key events and starts to paint a picture of why you should be checking it regularly.

Buying a house – A mortgage lender will look at your credit score to determine if you can borrow and how much.

Looking for a place to rent – Potential landlords will run a credit check to help them decide whether or not you will be a responsible tenant.

Staying protected against fraud and ID theft – If you regularly check your credit report, you will be able to easily spot anything out of the ordinary. Our alert service lets you know of any significant changes to your credit report.

Making a catalogue purchase – If you need to make a catalogue purchase using credit, your credit score will determine whether you’re approved or not.

Buying white goods, furniture or electrical goods using a credit cardWhen you make large purchases it often helps to be able to do so using credit in order to benefit from things like purchase protection and discounts offered by some card providers. Your credit score will be used to determine if you are able to buy your item of choice in this way.

You want a credit card or loan – Sometimes we need a cash injection to pay for big ticket items or just to improve our cash flow. When you apply for credit, banks and other providers will check your credit score to see if you’re a safe lending option and to see how much you can safely borrow.

Securing a new mobile phone contract – Mobile phone providers will run a credit check when looking for the contract deals you’re eligible for.

Buying a new car – If you want to buy a new car on finance the dealership will run a credit check to determine how much you can borrow.

Getting a new job – Employers can check your credit history to gain insight into how responsible and financially healthy you are.

Learn it, live it and nurture your score

No matter what you’re trying to achieve, you need to know your credit score and look after it. Not only will it empower you to purchase the things you want or take that next life step, it can help to keep your financial and digital accounts safe by alerting you to any suspicious changes.

Jaqueline Dewey, managing director at Noddle, explained that we all do things that might affect our credit score, from spending on our credit cards to opening up joint accounts. Consequently, it’s “crucial we keep an eye on them to see if our behaviours are helping or hindering our financial health”.

If we find it’s the latter, we need to be able to identify what we’re doing wrong so we can make the changes needed to put us on the right path. “Essentially, it’s about having the power to make the right decisions,” she said.

However, it’s not always our own actions that cause the problem; sometimes mistakes made by other people or instances of fraud compromise our details. This brings down our credit score and leaves us financially sick. Therefore, Jacqueline continued, “it’s important to have visibility over your credit score and report to ensure everything is as it should be and nothing out of the ordinary has occurred”.

 

By regularly checking your credit score, getting insights into the things that are affecting it and taking action, you’re helping to ensure that when important life events come on the horizon, you’re financially stable enough to enjoy them.