There is so much advice about how to improve your Credit Score out there.
I have written an article myself (you can find it here). However, the majority of advice gives you a lot of points/active measures you can take to help improve your Credit Score.
In this article, I decided to look at things slightly differently.
What are the things you can simply STOP doing, which will help?
Here we go through some of the options.
As always, some are easier than others and they will all depend on your personal financial position.
Stop applying for more credit.
If you make too many new applications for credit within a small amount of time it gives lenders the impression that you are desperate.
Too many applications will, therefore, cause two problems:
- Your Credit Score will take a dive. Too many applications will reduce your credit score and time to recover.
- If you manage to get credit from any lender, you will generally find that you are paying a much higher APR than you may normally be eligible for.
Stop leaving a balance on your credit card, if possible.
It is widely believed that leaving a balance on your credit card will help your Credit Score.
Lenders like to see responsible borrowing. If you can pay your Credit Card off in full, every month, then do it. Why would you voluntarily pay interest when there is no need to.
Stop going over your Credit Limit
Sounds obvious, doesn’t it?
It can be very easily done and sometimes, it can be a complete accident but you need to get on top of this.
Defaults, late payments, and over-limit charges are some of the larger factors that affect your Score.
Make sure you’re tracking when the interest is getting added on to your account. If you’re up near your limit, make sure you have enough available credit to cover the interest payment.
Ideally, if you can stop using more than 20% of your available credit, you will find your Credit Score will start increasing, as you are showing very nice responsible borrowing.
As with a lot of these points, if you can show that you are responsible and can plan your borrowing, you will look more appealing to lenders.
Anything that makes you look more appealing to a lender will generally also increase your Credit Score.
Consolidation or Payday loans
Stop looking for debt consolidation or payday loans.
Although many would argue (and I’ve been there), that these do have their place, adding more borrowing to your Credit File is not going to improve your score.
If you decide that a Debt Consolidation loan is the right thing for you, make sure you cancel all of your old accounts.
DO NOT keep the credit cards that you’ve just paid off.
Having them there is too much of a temptation and the last thing you want to do is build them back up and end up in a worse position.
If you are struggling with debt, have a look at my article (DMP, IVA, DRO) to see if there is a better option.
Although you may not always have a choice with this one, a stable address can help increase your score.
If you are constantly moving address every 2-3 years, lenders will take that as a sign of instability and therefore you will see a decline in your score.
Now I admit, this one can seem a little counter-intuitive.
There are many reasons why you may wish to change your Credit cards.
You may be shopping around for good balance transfer deals in order to reduce your interest payments. A good idea in itself, however,
A Credit Card with a good credit limit will increase your Credit Score, as long as it is managed properly.
Hold on to one or two of your cards which:
- You have held for a decent period of time (Anything over a year or two).
- Have a good credit limit. This, if managed correctly, will improve your Credit Utilisation Ratio (Explained here) and therefore your Credit Score.
Ok, so kind of a double negative here but too many people want to improve their Credit Score without tracking and interrogating their Credit Reports.
If you keep up to date with your Credit Report, get any errors changed, and use it to track what the lenders are seeing, you will generally find that it makes you more conscious of what you are doing.
Once you appreciate what is on your report, you will be much more likely to think twice about taking out new lines of Credit/adding more spending to your Credit Card. Purely a psychological thing but it worked for me.
If you are interested in learning more about your Credit Report and why you should track it, check out one of my other articles, available here.
In this article, we look at your Credit Score, why you should track it and where you can check it for free.
Increasing your Credit Score can be a tough task and one that many people ignore until it is too late.
The key with a large amount of the factors that affect your score is not so much what you can do, but what you need to stop doing.
Responsibility, security, and stability are going to be my 3 main keywords for this one.
If you can show the Credit Reference agency all of these qualities, your score will gradually rise to where you want it to be.
Just remember, very little happens quickly with your Credit Score and you need to be patient.
Just know, that if you implement some of the points listed above, and some of those in my other article (14 ways to improve your Credit Score today), then it will get better.
I wish you the best of luck and hope you get to where you want to be with your Credit.