💳Your Credit Score is More Important Than You Think. Here’s How to Boost it in 6 Simple Steps!

Your credit score holds the key to your future home. Without access to a mortgage, we’d most likely be renters all our lives. Depressing, huh. Though my Swiss relatives would tell you otherwise! My grandparents have been renters all their lives. That’s gov-controlled rents for ya. Moving swiftly on! 

Without a rock-solid credit history, you can kiss that future home of yours goodbye. Lenders will think you’re a riskier borrower and a poor/low credit score could see you getting rejected from your mortgage application or you’ll have to lock-in higher levels of interest than those offered to safer borrowers with higher credit scores.

But it’s not just mortgages that you’ll have an issue being approved for, btw, it’s any sort of credit really. 

Show ’em you can handle it 

If lenders think you’re a lower risk individual (i.e you have a high credit score), you’re more likely to get good deals like lower interest rates on loans and credit cards, which will make your borrowing cheaper and your life easier. 

Plus, if you’re seen to be a pretty good borrower, you could get access to even more credit! The thing is, credit scores take years to build and moments to destroy. Which is why you’ve gotta protect it — and do all you can to boost it. 

It’s not something you should be taking lightly. 

So here are 6 simple ways to help you build that score to make it mortgage-ready! 

#1 Pay it back — on time! 

There are no shortcuts here. If you want to show lenders that you’re super sensible and reliable with how you handle your credit, you’ve gotta pay back your credit card bill — in full, and on time, each month. 

I lied. There is a teensy shortcut — use a direct debit! I’ve set up a direct debit with my credit card provider. This way, my bill is automatically settled, each month. Without me having to ever worry about it. 

Make sure you’ve got enough funds in the bank! This’ll hopefully keep you from spending more than you can actually afford. 

#2 Careful not to use it all 

Another biggie is not to gobble up your credit allowance as though it were choc bars. This shows lenders that you’re desperate for the money. Not a cool look. 

The % of your credit balance you actually use is what’s known as your credit utilisation. 

As a rule of thumb, the lower your credit utilisation, the better! 

Here’s an ex: say you’ve got access to £5,000 credit each month and you use £2,500 on average, each month, this means you’ll have a credit utilisation of 50%. That’s pretty high. 

You should be aiming for a utilisation that’s well below 30%. Obviously, some months might call for big, one-off payments (like travel, home decorating ect) but as long as you’re not making a regular habit of it! 

#3 Vote!

Did you know that the longer you’re on the electoral register for, the higher your credit score will be! 

So it’s really important that when you turn 18 you register to vote. And stay on that register. 

You can even do this btw if you’re living with flatmates/your parents. Just make sure you update your address if you’ve moved. 

This is a quirk in the system but it highlights how lenders are looking for someone who’s responsible & reliable and you using voting right shows that, apparently! 

#4 Try to stay in one place!  

Avoid moving home a lot if you can. I know that this isn’t always possible to avoid, but it’s worth bearing in mind that lenders like to see stability in your circumstances. 

Moving home frequently may make lenders think you could be having trouble paying rent, for example. 

So stay put, if you can. Longevity will reward you! 

#5 The longer, the better 

If you have a bank account, stay with them. I know these days everyone seems to be doing it, but switching banks to bag a buck or two is really short-term thinking and in the long-run, it’ll harm your credit score. 

I know that banks don’t seem to reward you for loyalty, but trust me, when it comes to getting a mortgage, you’ll be glad you had stuck with them. 

And you can have more than 2 bank accounts! Many of my friends & fam have one old school bank (think NatWest, Lloyds ect) plus a fintech one (Starling, Monzo ect). As long as you’ve been with each of them a while, you’re good. 

#6 Have a few — but only if you can handle it! 

It can be a pretty good idea to show lenders that you can manage more than 1 credit card account, especially over many years. 

When it comes to the credit score’s algorithm, it’ll give you more points for having many long-standing credit accounts and (as mentioned in #2) for only using a small bit of that credit. As tempting as it is to want to dig right in! 

Note that if you’ve got any unused cards, this could be harming your credit score. 

Here’s a really good article I found on what to do with all your unused cards: https://www.experian.co.uk/consumer/credit-cards/guides/unused-cards.html 

What we’re seeing from all this is that lenders looooove stability. More than anything. They love customers who are reliable & sensible. 

So chances are if you’ve lived in the same home for a while, have been at your current back for donkey years and you vote (and have done so ever since you could!), then you pretty much check a lot of their requirements! 

The rest is just semantics, right?! 

Happy credit building! 

Disclaimer: This is not investment or financial advice. It is my opinion only. This is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.