There are a lot of situations that rely upon how good or bad your credit rating is. Whether or not you are granted a car loan or mortgage will depend upon the credit rating you have and even renting a home or getting a phone contract might involve a peek at your credit score.
That’s not to say that it isn’t possible to do any of these things with a poor credit rating, but it will certainly be more difficult. This makes turning your bad credit rating around an important exercise – but how can you do it?
Open a savings account
A good way to establish a good credit rating is to open a savings account. Set up a standing order from your regular current account on the day of the month you get paid and use this second account to pay utility bills and other regular payments. By putting aside a little more than you need into it every month you will build up a nice little nest egg.
Use a credit card
Regularly using and paying off a credit card will go a long way to building up a positive credit rating too. Shops often offer their own credit cards and even using these can help boost your credit rating but they often carry a high interest rate which can make them a risk.
Whilst credit rating improvements can help your financial situation it is important to select the right credit card as charges and interest varies widely.
Pay all your bills on time
Another step that will help is paying all your bills on time. Standing orders and direct debits are an effective way of managing this; just make sure they are set up at the right time of the month so that there are funds available to cover the costs.
Whilst carrying out the above steps, such as using a credit card, it is vital not to overstretch yourself. Keep a close eye on your incoming money and how it relates to your outgoing costs and make sure you don’t sign yourself up for too much. A good credit rating will help you in the future, but it’s important you don’t damage your current financial situation in the quest to improve your score.
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