How To Improve Your Credit Score | Quickly in 2022

Welcome back to the WIS channel and podcast! My name is Gemma, and here we talk about money, mortgages, and positive money mindset.

Today’s episode focuses on how to improve your credit score in 2022. Joining us is Ifthi, a trained accountant and mortgage advisor with over 10 years of experience and one of the founding directors at WIS.

1. What Is a Credit Score and Why Is It Important?

Gemma: What is a credit score and how does it matter in mortgages?

Ifthi:

Banks use credit reference agencies like Experian, Equifax, and TransUnion to assess your creditworthiness.

We often recommend Check My File as it consolidates all three main agencies.

A higher credit score shows lenders you are reliable. Scores closer to the maximum are considered very good or excellent, which lenders prefer.

2. How Can I Improve My Credibility?

Ifthi:

Banks want to see that you borrow and repay responsibly.

Use tools like credit cards, but always settle the balance in full.

Even small amounts matter; it shows a track record of repayment.

Ensure all other payments are made on time.

3. How Many Credit Cards Should I Have?

Ifthi:

Don’t apply for unnecessary credit cards.

Having multiple high-limit cards can worry lenders about overextending your debt.

Usually, 1–3 credit cards are sufficient for building credibility.

4. How Important Is Traceability?

Gemma: What does traceability mean?

Ifthi:

Banks need to know where you are; this mainly relates to your address.

Register on the electoral roll to help lenders verify your location.

You can opt out of the public register while still being visible to credit agencies.

5. Does Having a Landline or Phone Help?

Ifthi:

A landline or stable phone number helps lenders trace you.

Banks sometimes prefer a landline over a mobile phone in applications.

6. Should I Double-Check My Addresses?

Ifthi:

Check your credit file for correct addresses.

Notify all providers (mobile, utilities, etc.) when you move to avoid errors.

Incorrect addresses can affect your credit score, especially if you’re on the margin.

7. Should I Spread Out Credit Applications?

Ifthi:

Avoid applying for multiple mortgages or loans at once.

Lenders may see multiple applications as desperation or risk.

Space out applications to avoid negative impacts on your credit score.

8. How Important Is Stability?

Ifthi:

Avoid switching bank accounts frequently, especially near a mortgage application.

Frequent changes can confuse lenders about your financial stability.

9. Why Is Reliability Important?

Ifthi:

Do not default on payments; even one missed payment can impact your mortgage approval.

Missed payments can stay on your record for up to 6 years, though lenders may relax slightly after 2 years.

For credit cards, at least set up minimum payments to show responsibility, then overpay if possible.

10. What Should I Be Careful About With Joint Accounts?

Ifthi:

Joint accounts (utilities, council tax, broadband) affect both parties.

If your joint account partner misses payments, it can negatively impact your credit score for years.

Be cautious and choose reliable co-owners, or keep accounts in your name.

11. Should I Avoid Maxing Out Credit Limits?

Ifthi:

Don’t max out your credit cards; lenders look at how much of your available credit you use.

High usage signals dependency on credit, which reduces confidence in your repayment ability.

12. Why Should I Download My Credit File?

Ifthi:

Download your credit report to review your score and check for errors.

Check Check My File for a consolidated view of all three main agencies.

Seek professional advice if unsure; small changes (like registering on the electoral roll) can increase your score by 25 points, which could be critical for mortgage approval.

Key Takeaways

Use credit responsibly to build credibility.

Limit credit applications and cards to show dependability.

Maintain traceability, stability, and reliability.

Avoid joint account risks and maxing out credit limits.

Download your credit file and seek professional guidance.

Gemma:

These points may not apply to everyone; always consult an advisor.

Reminder: A mortgage is secured against your home; failure to repay may lead to repossession.