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Get a better credit score for the New Year

Get a better credit score for the New Year

Category: Credit cards

Updated: 04/01/2016
First Published: 04/01/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

A new year means a fresh start, and one of the best things you can do is take a cold, hard look at your finances – particularly when it comes to your credit score. Your credit card could well have taken a bit of a battering over the festive period and your credit rating could be suffering as a result, so it's time to take action!

Why you need a good credit score

Unfortunately, far too few people give their credit score the attention it deserves, and many aren't even aware of how important it can be. According to research from aqua, over three-quarters (79%) of respondents have no idea what their credit score is, while over half (53%) don't know how to improve it – but this could have a long-term impact.

A low credit score can not only reduce your chances of being accepted for traditional forms of credit in the future, but it could have more unexpected consequences, too. For example, did you know that a poor credit rating could affect your access to the cheapest utility tariffs, or that it could prevent you from being accepted for direct debits (often a cheaper form of payment)?

If not, you're not alone – a worrying 83% aren't aware that a poor rating could affect their access to cheap utility tariffs and a further 75% didn't know that it could revoke their direct debit privileges, which could have a significant impact on everyday household finances.

The ultimate resolution – and how to keep it

Considering how important a decent score can be, taking action to improve it will be a great way to start 2016. Happily, 22% of survey respondents said that they'll set a New Year's Resolution to better manage their money, while 18% have vowed to place more importance on their credit score, but just how can you stick to these resolutions?

  • Get into better habits. You want to start the New Year as you mean to go on, which means that getting into better habits is absolutely vital. You should aim to pay bills on time, or ideally ahead of schedule, to ensure that lenders look on you favourably (and absolutely never miss a payment or you'll get an instant black mark), and avoid keeping a high balance on your credit card, otherwise you could be viewed as already having excessive debt.
  • Only apply for credit when you really need it. Repeatedly applying for credit only to be declined will leave numerous black marks on your score, so only apply when you really need it – and if you've been declined once, don't keep trying elsewhere! Even if you're accepted, you won't want to apply for too many forms of credit in a single year, as this in itself could lower your score.
  • Have a fresh start. A New Year is a chance for a fresh start, so begin by closing any credit card accounts that you no longer use or need, and cancel any old agreements (if you apply for more credit but already have a lot available to you, lenders could think that you've already got access to too much). Make sure to sever old financial relationships, too – if you're divorced or separated make sure that your former partner's details are removed from any joint accounts, as their financial history can affect your own credit rating.
  • Keep on top of your score. You should check your credit score on a regular basis anyway, but if you're trying to work on it you'll want to be extra vigilant so you can see whether your improvements are paying off. Regularly checking your report can also ensure that everything is in order – i.e. that there's no false information and nothing to suggest identity fraud – so make sure to sign up with a credit reference agency, such as Experian Credit Expert, to keep on top of things.

Remember that a good score needs to be built up over time so you won't notice instantaneous results, but if you stick to your guns and commit to better money management, you could end the year with a far better score than when you started.

What next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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