How to Build a Credit Score

Building a strong credit score is important as it can often affect your ability to borrow money and access a range of products including credit cards, loans and mortgages. If you have a credit history, there are various tools that you can use to check your score for free. If it’s not in the best shape, you’ll be pleased to know that there are plenty of ways to improve this. If you’re starting from scratch and you have no credit history, then building your credit score might seem like a daunting task. 

Here at Planet Mortgages, we have a team of experts who pride themselves on going above and beyond to help clients throughout their entire mortgage journey. We’re experienced in working with a wide range of clients who are at various stages of the property buying process. One of the most common questions we get asked is how to build a credit score. We understand that starting from scratch might leave you feeling a little overwhelmed and unsure where to begin. So, below we’ve compiled some useful information on how to build a credit score… 

If you’re in the process of building your credit score, opening a bank account and managing your finances sensibly is a good place to start. If you have an overdraft with your account, it’s a good idea to ensure that you stay well below the limit. If you do use your overdraft, it’s also important to pay it off as quickly as possible. This will demonstrate that you’re financially responsible and will help you start to build your credit history. 

Once you’ve had your bank account for a while and demonstrated that you can manage your finances responsibly, you might be eligible for a credit card. Your bank may also give you the option to check your eligibility before making an application. Credit cards can be a useful tool when it comes to building your credit score. Paying a credit card off on time and in full each month can help build a positive credit history. However, if you do not manage your account well, you could harm your credit rating. 

If it’s unlikely that you’ll get accepted for a credit card, then it might be worth taking out another small form of credit. A mobile phone contract could be one example of this. This can help you to demonstrate your ability to pay bills on time and highlights to lenders that you’re responsible. However, it’s important to limit the amount of credit applications you make. Applying for credit can leave a ‘footprint’ on your credit record which lenders can see. Making too many applications in a short space of time can negatively impact your credit score. 

Keeping on top of payments and managing your finances well is a great indicator to lenders that you’re financially responsible. Any missed payments will be noted on your credit report and can give mortgage providers the impression that you’re having difficulty managing debt. This is likely to negatively impact your credit score which could result in issues with your mortgage application. 

A quick and simple way to boost your credit score is to ensure that you’re registered on the electoral roll. This is important even if you live at your family home or in shared accommodation. Companies will use this information to confirm your name and address are up-to-date. 

If you’re interested in finding out how to ensure you’re in the best position to apply for a mortgage, then we can help! Here at Planet Mortgages, we have a team of experienced mortgage brokers and advisers based in Colchester who can help guide you through the entire process. We’re passionate about finding out of this world mortgage deals and helping people land their dream home.