Your credit score is an extremely important factor in your financial life. It is a great indicator of your financial health, and therefore, a lot of company decisions are made with this number in mind.
Consequently, it is crucial that you do not neglect your credit score. Instead, you should aim to improve all aspects in your financial life, giving yourself the freedom, choice, and opportunities that you would not otherwise have access to.
But other than avoiding late repayments and accruing mounts of debt in your name, what other things can you do to maintain a good credit score? More to the point, what are the factors that you didn’t know affect your credit score?
1. Utility Bills
Even though utility companies don’t disclose payments directly to credit reporting agencies, your lender might assent to your utility payment documents when deciding on whether or not to offer you a loan. And whilst utility bills are not loans, they can still negatively impact your credit score if they are not paid on time, in the same way that a late or missed repayment on a loan would.
Why utility bills, in particular?
Utility companies are more likely to report offending accounts than other companies, so do your best to make payments on time to keep a good rapport.
Once you have been reported, your account is likely to be transferred to a collection agency, which will be permanently noted on your report, and will bring down your credit rating.
2. Several Credit Card Applications
Applying for several credit cards within a short space of time can do more harm than good. It is likely that putting in multiple credit card applications can cause your credit score to drop drastically.
Every time you apply for a credit card, a hard check is taken out on your report. If you accumulate too many of these checks, your credit score can decrease, and the lender may assume that you are desperate for credit.
To avoid this, you should always use an eligbility checker before submitting your application. This way, you can assess the likelihood of you being accepted and find out whether it is worth subjecting yourself to a hard check.
However, it may also be beneficial to note that some eligibility checkers may only specify your probability of acceptance and may not provide a definite answer.
3. Unpaid Parking Tickets
This is one that surprises many - some people don’t recognise that their old parking tickets and fines are printed on their credit bureau report until they actually apply for credit.
It is important to bear in mind that a speeding fine or parking ticket will only impact your credit rating if you have been taken to court due to your failure to repay. Nevertheless, If the court settles your issue, then you don’t have to worry about it appearing on your credit file. It will only appear if you lose your case, and do not pay your debt within a 30-day period.
Unpaid parking tickets can be detrimental to your credit score, so do your best to settle your debt as soon as you receive it.
4. Not Using Credit Cards
Although using cash can be a smart way of avoiding debt, avoiding using credit on a whole is actually damaging to your credit score.
Lenders don’t have any proof that you'll repay the borrowed money. Therefore, it is imperative that you maintain good credit and prove that you can manage your credit responsibly.
If you have never applied for credit before, then consider using a secured credit card. A secured credit card works just like any other credit card but differ in the way that they require a deposit. Upon transferring a deposit, the lender will provide you with a line of credit and your payment history will get reported to credit agencies. Making punctual repayments each month will support the establishment of your credit history and improve your score over time.
5. Closing Credit Cards
Your credit history, including the duration of how long your accounts have been open, and how long it’s been since you’ve used those accounts, contributes to 15 percent of your total credit score. So, if you are considering closing a credit card, you may want to think again. Closing a long-term credit card can have a negative impact as you will be wiping out a chunk of your credit history.
In light of this, you might want to consider closing a card with less credit history. It is important to strike a balance – having several unused credit cards is damaging but so is having no credit at all.
6. Not Being On The Electoral Register
What is the Electoral Register?
The Electoral Register is a record of individuals who are registered to vote in the public elections. In order to determine what district you would fall into, the following details are included on the register:
• Date of birth
• Electoral number
Why would this affect my credit score?
Having your details on the electoral register is a great way for lenders to confirm your identity and to check that the details you provided are correct.
This is a precaution for lenders as they want to rule out any chances of fraud or identity theft. Accordingly, the more accurate your details are, the more secure your application and so, the more confident they are in lending money and accepting your submission.
Facing your credit report can be overwhelming. It can seem that there are so many different factors that contribute to it, that you give up before you even try. But doing a little bit of research here and there to prioritise the maintenance of your credit score can not only expand your financial options, but set you on the path to exceptional financial health. What are you waiting for? Begin by checking your credit score free at Experian and find ways to better your credit score today!