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5 Things that Could be Impacting Your Credit Score Without You Knowing

Having a strong credit score can help you get one step closer to securing finance as it is a way to check if you are financially reliable. A higher score is a positive sign to lenders, so it is worth taking steps to avoid bad habits that could be detrimental to your score.

With searches for ‘how can I improve my credit score?’ up over 20% since May 2020, car finance provider Zuto have highlighted five activities that could be impacting your credit score.

Relationships

When we get into a serious relationship, many of us will get bank accounts, mortgages, or other credit products together. By doing this, you become financially linked to your partner. Once this happens, your partners’ credit profile can impact your ability to get approved for credit – regardless of whether you are applying together. If either of you have a low credit score, or a poor credit history it might be best to take steps to boost your scores before linking up financially.

Once you become financially linked, it’s important to maintain a good credit score and not rely on your partner’s score. It can be tempting to put all the household bills etc. in one partner’s name. However, keeping on top of bills and paying them on time via direct debits helps boost your credit score so it is important to ensure you keep some sources of credit in your name.

With COVID restrictions easing, there is a light at the end of the tunnel for weddings. Once you’re married, you may choose to change your name. Changing your name can be a lengthy process; making sure you’ve contacted everyone who needs to be aware, such as your bank, doctors, and the DVLA. To minimise the impact on your credit score, make sure you update your name on all of your accounts such as credit cards and utility bills. You’ll also want to update the electoral roll in your new name too so that the link between your credit and your new name is there.

Sadly, not all relationships work out, so in the unfortunate event you decide to part ways, let credit agencies know you would like a notice of dissociation to stop your ex’s financial activity from impacting your score.

Keep Credit Utilisation Low

We all know maxing out a credit card, or even getting close to the limit, isn’t a good habit to get into. Using credit responsibly and regularly can help improve your credit score as it shows you can pay back money you borrow. With that in mind it is important to understand how much you should be spending versus what is available to you. Credit utilisation is the amount of credit available to you, so this could be across overdrafts and credit cards, versus how much you have used.

It is best to avoid being too close to the limit as it could indicate you are having financial troubles. Different agencies suggest different ratios, one of Zuto’s trusted partners, ClearScore, suggest aiming for a credit utilisation of under 30%.

Cancel or keep old Credit Cards?

This is an important question when considering what impacts your credit score. Typically, having access to too much credit, even if you don’t use it, could be seen as a negative by some lenders. So, it’s worth considering closing down the ones you don’t use or need anymore. This can also reduce the risk of any fraudulent activity happening on old unused credit cards.

However, if you’ve had a credit card for a while, and it’s been used and managed well, this can help keep your credit score at a healthy level so it’s worth considering keeping hold of these ones. Just make sure that all credit cards are registered at your current address.

Cash and Credit Cards

It can be tempting to keep an emergency £10 in your wallet; however, it is best to avoid taking cash out using your credit card. Doing so is listed on your credit record and could be a red flag for lenders as it may be viewed in a similar way to applications for credit.

House Moves

While your address doesn’t impact your credit score, it is information that appears on your credit report which impacts your score; so it is important it is correct and up to date. Moving house often could be a sign to lenders that your living situation is unstable and may make them wary of lending to you. There are also lots of financial implications of moving, so keep an eye on your credit report. It may be best to hold off on applying for credit until you have registered to vote at your new address, as not being on the electoral role could increase your chance of being declined for credit.

Update the address on all of your accounts as soon as you move, even if you manage the account online, this can also reduce your chance of being a victim of fraud. Also, remember that having too many applications for credit over a short period of time may reduce your score, so be mindful of when you are applying for credit. Don’t forget to update your address on all sources of credit as inconsistencies in address can be detrimental to your score.

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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