We often hear about credit scores, and that we need to have a good one. But, what does this mean? Why is a good credit score needed? How do you improve your credit score?
Your credit score reflects how responsible you are when it comes to borrowing money and making repayments, both on time and in full.
Why is a good credit score needed?
- As you go through life, you’re likely to have goals that you’d like to reach. These goals could include taking out a phone contract, financing a car, or even taking out a mortgage for a house. In all cases, your credit will be checked.
What is a good credit score?
- A ‘good’ credit score can vary between platforms. For example, on Experian, a good credit score is anything around the 700’s and up. On ClearsScore, a good credit score is anything around the 400’s and up.
- You may find that you have a good credit score on one platform and not the other. Platforms like ClearScore borrow data from credit agencies like Experian so it may be best to go straight to the source.
A few ways you can improve your credit score
- Make sure you are on the electoral role – this adds to your credibility and shows that you are a real person (it’s also good to vote)
- Get a household bill put into your name – make sure this bill is paid on time and in full
- Take out a credit card – only do this once you are well informed, you know what you are doing, and you are responsible
- Do not ignore defaults and CCJ’s – seek professional advice when it comes to defaults and CCJ’s, but do not ignore them
Myth bust‘If you take out a credit card and don’t use it, your credit score will increase’
This is not the case. If you do not use the credit card, this will not show that you are a responsible borrower.
Check your credit report
- Many people just focus on the score; however, it is important to check your credit report. Your credit report will detail why your score is going up, down or staying the same. It is also a good idea to check your credit report to make sure your personal details are correct and that you are not a victim of identity theft or fraud.
Your credit score is important, even if you have a lot of cash. If you haven’t checked your credit score and report this month, it may be a good idea to have a look today.