Your credit score might just be a few numbers on a screen, but it can determine a surprising amount of factors in your life. For example, did you know the following can – and do – check your credit score?
Rental agents when you’re trying to lease a home can run a credit check to ensure you’re a sound financial candidate. If you fail, you might be forced to pay higher rent – or just outright refused a property.
Your cellphone and landline providers will usually run a credit score prior to offering your coverage. If you don’t pass, they won’t supply to you.
More and more employers are now asking for credit histories as part of their application process. This can trap people in a cycle of debt, as they can’t change jobs – and thus earn more money – due to their bad credit history.
The above aren’t strictly financial products; most of us already know any credit card or loan we apply for will be subject to credit approval. Yet they nevertheless use the same information to make their decisions. With more and more different processes requiring a good credit score, it’s no wonder so many people are choosing to focus on how to improve their credit score as quickly as possible.
In the midst of undertaking such a task, it’s important to identify the behaviors that can change your credit score for the worse. As with the examples above, not all of these things are strictly financial. If you’re going to apply a holistic method to improving your credit worthiness, then you need to keep in mind all of the factors that can result in a bad score.
- Moving House Frequently
Creditors like to see stability; it’s the primary thing that they look for when examining a person’s finances. If you have moved house a lot, then this will go against you on your credit file, because of the impression of instability it creates. Even if you move a lot for completely legitimate reasons – such as due to changing jobs – it doesn’t matter when stripped back to the bare numbers.
If you’re going to make a real effort to improve your score, then try and do it from a single home for a few years to stand the best chance of success.
- Not Borrowing
It sounds ridiculous but, yes, not borrowing at all can be a worrying sign for creditors. Again, this all factors back to stability. If you’re in settled employment and your finances are stable, then chances are you will have some form of borrowing. If you don’t, then there’s no history available as to what type of customer you are – and that makes creditors nervous.
Of course, obtaining credit if your score is already bad is easier said than done. It’s worth looking through really bad credit offers to see if you can find a lender willing to offer you a credit card or loan. Carry a small balance that you know you’re going to be able to pay off, and ensure you make your payments on time, every single month.
- Your Partner’s Credit
When you move in with someone, you create a financial relationship – at least, in the eyes of the credit agencies – with that person. If their credit is poor, then yours could be impacted by it – even if your own history is flawless.
If you’re living with someone with a poor credit history, then keep your finances separate until their score improves. So no joint accounts or utilities bills; split everything down the middle and each be responsible for your half. This helps to reassure credit agencies that you’re not being “tainted” – for want of a better word – by the poor financial management of your other half.
- Mistakes
Even if you consult your credit score on a regular basis, do you really look into it? Most people with bad credit histories tend to squint at their report rather than delving in deep – and that’s a mistake.
Credit reference agencies can and do make mistakes, which can be to your cost. Go through your report to ensure all the information being held about you is accurate. If you find a mistake, then there are mechanisms to get it corrected. This can be a long process, but it’s definitely one worth getting the ball rolling on as soon as you identify an error.
Credit scores are a pain, but they are a part of life that we just have to roll with the punches on. Go through all of the above as well as practicing good financial management, and your score should eventually begin to rise.
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