Get on the electoral roll to boost your credit score
Many young people are damaging their chances of getting credit, with only one in five (22%) adults aged between 18 and 24 registered on the electoral roll, according to new research.
Of those surveyed in research conducted for credit card provider Aqua, not one 18-24 year old thought they could be declined credit because they aren’t on the electoral roll.
Yet while many realise being on the electoral roll enables you to vote, it also proves your name and address to lenders and being on it is likely to boost your chances of getting credit.
A spokesperson for Aqua, warns: “Applications for access to credit are often declined simply because of failed identity checks due to simple errors.
“One common example is bills being registered to a previous address, a problem you can easily solve by registering on the electoral roll at your current address.”
To get on the electoral roll, visit https://www.gov.uk/electoral-register/overview
If you’re unsure if you’re on the electoral roll, contact your local Electoral Registration Office.
First-time buyers should also pay heed to their credit score. If you fail to repay your credit cards or mobile phone bills on time, it’s likely to have a negative impact on your score, which in turn could hinder your chance of getting future credit – including that ever-important mortgage.
And having little or no credit score can be just as bad, as lenders have no reference of your ability to manage credit.
Boost your credit rating
Aqua recommends the following tips to improve your credit rating:
1. Make sure you’re on the electoral role.
2. Pay all your bills on time, even paying a couple of days late can make a difference.
3. Close old credit card accounts and cancel old direct debits.
4. Do not take out more than two forms of credit within a six-month period.
5. Do not apply for more than one credit product at a time as each application can have a negative impact on your credit score.
6. Try not to use more than 75% of your available credit limit.
7. Only apply for credit when you really need it – applying for more than four forms of credit in a year can lower your credit score.
8. Look into specialist credit card providers, which help people to build and improve their credit record. Use our tool to Compare credit cards that are specifically tailored towards those with bad credit scores.
Once on the page, select the type of card you’re after, then filter your results by ‘Application Information’, and then select your credit rating. See the screenshot below for help on how to do this (click to enlarge).
9. Ensure there are no incorrect details on your credit record – check it regularly and if the details are wrong, correct them.
10. End financial associations with ex-partners. If you’ve had joint products together their score can impact yours, so close any old accounts.
Your credit score is a three-digit number (ranging from a low of 300 to a high of 850) calculated from the information in your credit report. Your credit score enables lenders to determine how much of a credit risk you are. Basically, a low credit score indicates you present a higher risk of defaulting on your debt obligations than someone with a high score. If you have a low credit score, any products you successfully apply for will carry a higher rate of interest commensurate with this risk.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.