Top credit mistakes and how to solve them

Improving your credit score is an important first step to getting the life you want, demonstrating to lenders and employers that you make responsible decisions and are financially stable.

While everyone’s credit history is unique, there are generally a few common mistakes people make that can drag down their score. To help you get financially fit, here is a rundown of some of the top issues affecting credit scores and how to tackle them.

Mistake: Not registered to vote

Solution: Get on the electoral register ASAP. It’s your choice whether you actually vote or not but you need to be on the register so credit companies can confirm your details. It’s also good for your score if you can prove you’ve lived at your address for 6 years or more, as it means lenders have a fixed abode to send communications to. Click here to register to vote in the next election.

Mistake: Failing to act on errors

Solution: Spend time reading your credit report each month and if something doesn’t look right, investigate. There are times to give the benefit of the doubt but your credit score isn’t it. You need to pick through it with a fine tooth comb because errors could be negatively impacting your score or, worse, be a sign a fraud has taken place. If you’ve found an error contact the lender directly or you can use our services and we will raise the issue on your behalf.

Mistake: Failure to clear debt with regular payments

Solution: Create a budget and set up a plan for debt repayment. Budgeting is the first step towards getting your finances under control and will help to stop the problem getting worse. You can then focus on paying off debts with regular and manageable repayments, preferably through direct debit to automate the process and remove human error. Even if you have a lot of debt, making the minimal repayments set by the lender will help to improve your credit score. Remember that late payments are recorded on your credit report and remain there for six years, even if you’ve settled the account and paid down the debt. If you need help with debt consider seeking help from a debt charity like StepChange.

Mistake: No experience of borrowing

Solution: Get in the credit game. While too much debt can be bad for you, if you’ve never borrowed money you’ll find you have a limited credit profile. One option may be to take out an affordable loan or credit card for something you are planning to buy and make regular repayments in line with their terms and conditions.  However, it’s important to act responsibly when taking out and using lines of credit. Do your research about the options available to you and be clear about how much you can afford to borrow, how much repayments will be, when they will be and over what time period.

Mistake: Staying financially entangled

Solution: Get a financial disassociation if the account is now in one name only. Joint mortgages or loans stay on your credit report long after a relationship has ended if you don’t take action to get them dissolved. While you may think it’s harmless, if your financial associate has debts this may impact your ability to obtain credit.

Mistake: Idle accounts

Solution: Consider closing accounts that are no longer active. Unused accounts can result in fees and even fraud, therefore threatening your score. However, be smart about what you do and do not close. Long-standing accounts with a good track record can be beneficial to demonstrate your credit history if you resume using them. What’s more, if you do decide you want to close numerous accounts, be sure to do so over a prolonged period of time, because closing down a lot of accounts at the same time could impact your credit usage and score. It’s also important to monitor any accounts that remain open.

By identifying the factors that are impacting your score and taking action against them, you are not only putting yourself on track to increase your score, you are demonstrating to lenders that you’re committed to improving your financial health.