Starting a family has been amazing; having Luke and Oscar have been my proudest moments in life and nothing will ever top that. The absolute cherry on the top would be for Mikey and I to get ourselves onto the property ladder and secure ourselves a proper family home. I aspire to own a beautiful house that my kids can grow up in and still consider their home, even when they’ve long since flown the nest.
To achieve all of this, we will obviously need to get a mortgage. To get a mortgage, we need to have relatively decent credit ratings, as well as meeting all the other criteria. Honestly, I personally don’t have much of a credit history, so building up my credit score is something that I have been thinking about a lot lately. There are a few ways to build your credit score and it does all seem pretty daunting at first, but I think it’s really quite simple once you’ve got your head around it all.
Two important things I’ve learnt when doing my own research are:
- it’s better to start building credit up sooner, rather than later
- having a non-existent credit history is almost, if not just as bad, as having a bad credit history.
What is a credit score?
First thing’s first – what is this magical credit score and why do I need it? Put simply, a credit score shows how likely you are to be be accepted for credit. ‘Credit’ is borrowed money that you agree you will pay it back at a later date. A myth which I had heard and believed up until recently is that your credit score is universal. This simply isn’t true – each lender scores you differently and will assess whether you’re a high risk or low risk borrower. You need to have a good credit score if you’re looking to taking out loans and mortgages as, the higher your score, the less you’ll be charge and the more you’ll be eligible to borrow. A good credit score means that banks and money lenders will see you as a trustworthy individual who is capable of paying back all the money you’ve borrowed.
If you’re reading this, it’s likely that you have a bank account and a debit card, just like me. What I don’t have on my current account right now is an overdraft. Up until recently, I never really thought that I needed one…I’m not one to make big impulse purchases and I have always preferred to only spend the money I actually have. However, if I want to start building up my credit score and ultimately secure that mortgage, I need to show that I can handle my finances and repay my debts. Most current accounts come with the option to add an overdraft, so this is a good place to start if you’re looking to improve your credit score. Simply pop online or into your bank and see what they can do for you.
I didn’t even know credit builders existed until very recently. They’re designed to help you build credit without running a credit check on you beforehand. Usually the credit builder is an option you can apply to a card, whereby you are effectively given a loan that you pay back in monthly installments. It’s worth noting that although it’s a convenient way to build up your credit score, they are likely to come with monthly fees.
Woohoo, something that I actually own: store cards! But…guess what? I rarely use them. Another epic fail for me on the credit history front. The good news is that store cards are pretty rife and most retailers have them. The bad news is that they often have extortionate interest rates attached to them. I’ve been looking into how I could use mine to help me improve my credit score and it seems that you really can reap the rewards without too much of a dent to the bank balance. The trick is to use the store card, take advantage of the benefits and then pay it off before you get stung by the interest payments. I’ll definitely be looking to obtaining other store cards in the future, but I must remember to space out the applications as signing up to lots at the same time can do more damage than good.
Getting credit and then proving that you can pay it back is what a credit score is all about. With that in mind, it may be worth taking out a short-term loan with somewhere like CashLady, especially if you have a poor credit score already. Short-term loans have high interest rates, so it’s imperative that you understand the financial commitment you’re undertaking if you do decided to take out a short-term/payday loan. If you’ve made a few financial mistakes in the past and you’re now in a better position and trying to build up your credit score, something like this could help you out.
Building a credit score seems like a daunting task, but with the right research, it is totally doable. For me, it’s clear that I need to start straight away. Up until now, having no credit history hasn’t really affected me, but now that we’re planning our future together, it’s all hands on deck! If you have a bad credit history, or like me, a practically non-existent one, hopefully these tips will help you on your way to improving that 3-digit number and proving to lenders that you’re a low risk borrower. I’d love to hear any tips that you have for building up your credit score, so please do leave them in the comment section!
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