Credit Cards & Loans
Some simple ways to destroy your credit score
Some might think that meeting agreed payment dates and generally sensible behaviour in respect of credit cards, overdrafts and loans is enough to maintain a spotless credit rating.
The reality is that simple mistakes and slipups could have destructive implications for your credit rating.
Here are some simple ways you could, unintentionally and unnoticeably, hurt your credit standing.
- Application Overload
Some make several applications for credit with different lenders to see whether they will be approved, and get a good idea of their credit rating.
However, lots of applications for loans and/or credit cards in a short stretch of time makes it appear as if you’re in frantic need of credit. This is because the vast majority of lenders employ ‘hard’ credit searches, which lower your credit rating slightly with every examination.
There are a number of credit card and loan eligibility checkers online, that use ‘soft’ searches to see whether you qualify for credit, and at what rate. Investigate these before making a ‘hard’ application.
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- Missing Errors
Inaccuracies in your credit history could mean you are rejected for a loan, mortgage or credit card.
Before making an application, check your credit history and ensure it’s wholly accurate. Experian offer you the ability to check your credit rating online for free (and without damaging your score) by signing up for a free 30 day trial. Click here to find out more.
If you spot an error, contact the lender in question, and the relevant credit rating agencies. You should also notify the Information Commissioner’s Office, the body responsible for protecting the accuracy and security of public data.
- Maxing Out
Reaching your agreed credit limit isn’t viewed positively by lenders. In fact, consistently ‘maxing’ your card(s) can lower your credit score.
Not using your allowance every month is a sign that you don’t depend on credit to make ends meet. If possible, secure a higher limit than you actually require – having a high limit but consistently not reaching it could improve your credit rating.
- Electoral Registration
Oddly enough, not being on the UK electoral register can damage your credit rating. It plants doubt in lenders’ calculations that you are who you say you are – and you live where you say you do, too.
Being on the electoral roll not only supports credit applications, but improves your credit score overall by serving as a means of verifying your identity and personal details.
- Missing Payments
An otherwise unblemished payment record does not offset the deleterious impact a single missed payment can have on your credit history.
A missed payment can mark your file for up to six years. Missed payments are very common indeed, and are often due to oversights or mistakes, rather than an inability to pay or conscious ‘skipping’.
For those who have missed a payment previously, fret not – your recent record is of greater relevance to lenders than your distant credit past. You can boost and refresh your credit score in a number of different ways – and Your Money can help you do it.
Please consult our guides ‘Ten ways to give your credit score a boost’ and ‘Five ways to improve your credit rating’