March is Credit Education Month

blue master card on denim pocket

In honour of Credit Education Month,  here’s a few tips to manage and improve your credit.

  • Check your credit report. This should be done at least 60 days or 90 days before applying for a loan in order to make sure that the report is correct. If it’s incorrect, make sure to notify a credit agency before you apply for a loan.
  • Pay your bills on time. When a bill is paid late, or is even 30 days past due, it can show up on your credit report for up to six years.
  • Manage credit responsibly.  Less is more. By cancelling credit accounts and getting new ones, you cause a negative impact on your credit score which can take months even years to repair.
  • Avoid going over the credit limit. Some credit card companies allow you to do this as a courtesy, but it can negatively reflect on your ability to handle your account.
  • Use credit when needed. If you never use credit of any kind, it doesn’t mean that you’ll have a great credit history.  Most lenders prefer to see at least three to four accounts reflecting a satisfactory 24-month payment history.
  • Avoid “shopping for credit.” Each time you apply for a loan or credit card, an inquiry from that lender will be reflected on your credit report. Inquiries can affect your credit score although some lenders will offer an eligibility checker which does not leave a footprint on your credit score
  • Add an installment loan to the mix. You’ll get the fastest improvement in your scores if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans).
  • Use your cards lightly. Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. You often can increase your score by limiting your charges to 30 percent or less of a card’s limit; 10 percent is even better.
  • Consider limiting your credit.  Applying for a new account, transferring balances, or concentrating all of your credit-card balances onto a single card can result in a lower credit score.
  • Get your name on some bills if it isn’t already Utility bills – such as your mobile phone contract or your gas bill – count as a form of credit. They’re a great way to show lenders you can pay your bills back reliably (as long as you pay on time).
  • Get on the electoral roll Getting on the electoral roll (also known as the electoral register) can help improve the way you’re viewed by lenders, and boost your chances of getting accepted for credit. This is because credit reference agencies are able to verify who you are, which can make you appear more stable to lenders. You can register for the electoral roll here. If you’re not sure if you’re registered, you’ll need to check with your local authority which you can do here.
  • Check for fraud. Although rare, identity fraud is becoming an increasing problem. If you fall victim, this could potentially damage your credit score, as you become responsible for the credit actions of someone else. Checking your credit report regularly will help you spot financial fraud quickly. If anyone is trying to open credit in your name, you’ll be able to see the early signs in the searches section of your report.

 

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