Unlike the United States, the UK bases credit scores on individual lenders. These scores are solely used to educate citizens about their financial standing and how well they are doing with managing credit. Still, it is important to understand what it takes to improve your credit score and which actions will end up damaging it in the future. Having a good credit score gives you access to better credit card offers, higher loan amounts, and better chances of securing a mortgage for you to own a home.
Let’s see what are the things that hurt your credit score the most.
What Affects Credit Score Negatively: Top 5 Detrimental Actions
These are the things that will hurt your credit score, perhaps without you realising it. Becoming aware of this will help increase your chances of maintaining a high score.
1. Being Late on Payments
One of the biggest things that hurt your credit is being late on payments. Do your best to always pay on time, and call your creditor if you know you cannot make the full payment. Most of the time, they will be able to work out an alternative situation for you that will allow you to make payments toward the minimum without being considered late on your payment.
What this refers to is simply not paying debts. This is one step beyond making late payments because making no payments at all will make a huge dent on your credit report. This is also known as a credit file. What this entails is details about your finances that make up your overall credit score.
3. County Court Judgments
After defaulting, it is possible to receive a CCJ (county court judgement). When this occurs, it is particularly detrimental because it will stay on your record for six years. However, if this does happen, you still have options to fix it. Through free debt advice, you can get options to handle this situation if you are going through it.
4. Not Being on Electoral Roll
Even if you choose not to vote, most people do not realise that not being on the electoral roll actually impacts your credit score. All you need to do is register online, and this is an easy way to give your score a small boost.
5. Withdrawing Cash on Credit Cards
Many credit cards boast the options of cash advances, which are essentially withdrawals from the card that come with very high fees and interest rates to pay off. Avoid this when you can because it is much wiser to just use your credit card. Withdrawing cash from it will automatically make your credit score decrease.
Ways to Boost Your Credit Score
If you are looking for ways to fix things that hurt your credit, and to better your score, consider the payments you are making and if you only opt to make the minimum payments. By making payments slightly higher than the minimum, you will be able to avoid costly interest rates that add up.
You also need to be careful how often you are applying for bad credit loans and new cards. If you truly need a credit card, do your research and see if you can pre-qualify for any of them. Applying for multiple new cards means these lenders are going to run your score each time, which will inevitably lower it.
With these tips in mind, you will be able to maintain a great credit score that will allow you to afford the necessities you desire. Having bad credit now does not mean you will always have bad credit. You can improve your score by keeping the above tips in mind, and this will make a huge difference in your financial status and peace of mind.