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Things to never do if you want a good credit score

Things to never do if you want a good credit score

Category: Credit cards

Updated: 16/11/2015
First Published: 01/07/2015

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 It is now over 6 months old so the content may be out of date.

Having a good credit score is the key to a wealth of borrowing opportunities. It can quite literally open doors to anything from credit cards and mortgages to phone contracts and bank accounts, but without a decent rating behind you, those doors will be locked firmly shut. So, rather than what you should do if you want good credit, we thought we'd take a look at what you absolutely should NOT do if you want to build your score to credit-worthy heights.

Remember, in order to secure a mortgage, credit card or personal loan you need to have a good credit rating. To find out if yours has a clean bill of health, contact a credit check provider, such as Experian CreditExpert to investigate your credit report.

DON'T…

  • Forget to change your address on the electoral roll. Being on the electoral register at your current address is the first thing lenders will look for when considering your application. If it doesn't match up, you'll be declined, so don't forget to keep it updated!
  • Keep unused credit agreements. If you've been diligently paying off your credit cards and have finally managed to repay the balance, don't keep the account open. Lenders will take into account the total amount of credit you've already got available, and if it's too much, they may be wary about lending you any more. The key is this – if it's paid off and you don't need it anymore, close the account!
  • Pay bills late. If you pay your bills late on a regular basis you'll start to be viewed as a credit risk, and if it gets so bad that you miss payments or default on a credit card, it'll put a serious black mark on your file. Always pay bills on time or ahead of schedule, ideally setting up direct debits so there's no chance of forgetting, and you'll start to build up a good score.
  • Have zero credit commitments. If you don't have a history of being good with credit, how will prospective lenders know that you're not a credit risk?! Mortgage lenders in particular will expect to see a decent credit history, so don't think that being credit-free is the Holy Grail. Instead, take out a credit card and use it to make a few small purchases each month, and then repay the balance in full when your statement arrives (this is key as it'll avoid interest being added on). Do that, and you'll build your credit rating in no time!
  • Max out your credit cards. You should always avoid keeping a high balance on your credit card as lenders will view this as excessive debt. Ideally, try to only use around 25% of your available credit, and then lenders shouldn't be too concerned about your ability to repay.
  • Apply too often. If you've recently taken out a loan or credit card, don't apply for anything else too soon afterwards. You should only apply for products if you really need them (applying for more than four forms of credit in a year can lower your score), and if you've been declined for a loan or credit card, stop applying elsewhere! The decline will already be noted on your file and will make it less likely that you'll be approved somewhere else, so don't risk adding extra black marks to your report.
  • Forget to sever old financial relationships. If you've held joint accounts with someone in the past but are now divorced or separated, make sure to sever all financial ties with that person. If not, their credit status will reflect on yours, with previous financial associations affecting your rating.
  • Fail to check your score. The most important thing you can do is check your credit score on a regular basis, particularly if you're planning to apply for credit in the near future. Doing so can give you an idea of whether or not you'll be accepted for credit, and will also allow you to see if there are any errors on your file – contact the credit reference agency if you spot anything that's incorrect, as you wouldn't want to be refused credit for something that wasn't your fault. Plus, if you've got a low score, you'll be able to pinpoint things you need to work on (refer to the previous points), and if you remember what you should and shouldn't do, you'll be on your way to becoming a credit-worthy individual before you know it!

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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