5 Ways to improve your credit score – and why it matters

{Expert Guest Post from Yasmine Bachir}

When you’re young, the last thing on your mind is your credit score…

However, as you get older and start to make more important purchases and life decisions, you begin to realise just how important it is to have a healthy credit score. Applying for a mortgage, for instance, can be a lot more difficult if lenders feel that you won’t be reliable as far as making repayments is concerned. If you’re unaware about the importance of having a good credit score, you could unwittingly do things to damage it.

Fortunately, there are a number of simple things you can do in order to ensure that your credit score both gets and remains high.

Pay credit card balances off every month

The best way to ensure that you build up a good credit score is by proving that you can manage the credit you sign up for in the form of credit cards. Many banks will send you a credit card unsolicited, so all you have to do is spend very small amounts on them each month and make sure they are paid off when they should be, without incurring debts that may have to be forcibly collected. This will reassure lenders that you are on top of your finances and can be trusted to handle monthly repayments.

Build an address history

You must have an official record of past addresses so that lenders can double-check the credit details you have given them against where you lived at the time. This enables them to build up a full picture of your credit history and lifestyle – for instance, do you move around a lot or is your living situation relatively stable? The fuller your address history, the better off you will be, but don’t worry – your specific addresses and where you have lived won’t affect anything to do with your credit.

Cancel unused credit cards

There is conflicting advice on offer as far as unused credit cards are concerned. Should you cancel them or not? Well, keeping cards you don’t use open is considered a fraud risk but, on the other hand, a card with a high level of credit will look favorable for you, even if you never use it, as it shows you have been previously trusted with that credit limit. However, if you have managed your other cards properly, they should act as perfectly good indicators of your credit history.

Stay well within your overdraft limit

Make sure that you don’t regularly nudge up against or exceed your overdraft limit, as this looks like you can’t handle your finances properly and will make lenders less inclined to approve you for credit cards, car financing, mortgages and so on.

Get access to credit but don’t use it

If you have never had any credit before, lenders don’t have anything to go on when you finally do apply – are you going to be a conscientious re-payer or lose track of what’s going on with your finances? To this end, it’s certainly worth signing up for certain credit facilities even if you never use them, just so you can start building up a credible history.

–About the Expert: Hi, I’m Yasmine Bachir! I am very passionate about self-betterment. I love to read write and share anything to do with financial difficulties and wealth improvement. My goal in life is to become an expert financial advisor! You can connect with me on Twitter here.