12 Feb How to Boost My Credit Score
How do you boost your credit score? You can boost your credit score by:
- Using a credit card
- Obtaining short-term insurance
- Having a low debt-to-income ratio
- Maintaining a low credit utilisation ratio
- Having no late or missed payment
- Removing inaccurate information
- Minimising hard enquiries
Having a bad credit score can lead to higher interest, loan rejections, lower credit limits, higher insurance premiums, and higher security deposits. You might also face difficulty renting, higher mortgage rates, denial of jobs in finance, and emotional stress from higher indebtedness resulting from high fees and premiums.
This blog discusses how to boost your credit score: actionable tips, steps to take, and why these strategies work.
Use a Credit Card
Use an unsecured or secured credit card to pay for everything. Load your credit card with part or all of your salary, then use it to pay for groceries and other essentials. This way, you’ll use your credit card without getting into debt, which will boost your credit score. Using your credit card without incurring debt – and technically paying it back immediately – shows the bureaus that you’re capable of using your credit facility well.
Obtain Short-Term Insurance
Get short-term insurance for your vehicle or a valuable asset. This way, you’ll be charged a small amount each month by debit order. When you pay on time regularly (don’t miss a payment), your insurers will report it to the credit bureaus. This will create a positive payment history, one of the factors used to calculate your credit score.
Have a Low Debt-to-Income Ratio
A low debt-to-income ratio demonstrates that you’re not credit-reliant. A high debt-to-income ratio shows that you’re a high default risk, which will lower your credit score and could raise rates and fees you pay, further indebting you. To mitigate this, ensure you don’t use more than 30% of your salary on debt repayments.
Maintain a Low Credit Utilisation Ratio
Credit utilisation ratios are the amount of credit you use compared to what you have available. Your credit utilisation ratio should be less than 30%. Again, having a high ratio shows that you’re credit-reliant, and have a high default risk, which could lower your credit score.
Don’t Pay Late or Miss Payments
Paying late or missing payments could vastly drop your credit score. This is because it shows you’re unreliable with credit and could default. Defaulting could lead to dangerous legal consequences, such as a garnishee order or judgment, which would necessitate high legal fees to defend your case. If you lose, you might be liable for your creditor’s legal fees, too. If you have too much debt, consider enlisting a debt clearance service.
Remove Inaccurate or Incorrect Information
If there’s a late or missed payment shown on your credit report that was inaccurately reported, you have the right to dispute it at no charge. Note that you can’t dispute late or missed payments if you actually did pay late. If you have charges on your credit or store card that you didn’t make, report fraud to your credit facility. They can have the charges removed from your credit history, which could lower your credit utilisation ratio and debt-to-income ratio.
Minimise Your Amount of Hard Enquiries
Numerous hard enquiries show that you’re desperate for credit, which lowers your credit score. To avoid this, don’t apply for loans often. Carefully review your credit report with a soft inquiry (you can get one credit report for free each year from the bureaus) and assess your credit utilisation ratio, whether you have late or missed payments, how high your debt-to-income ratio is, and how high your credit score is before you apply for credit. This will reduce your chance of being rejected. Credit Boost offers soft inquiries that won’t hurt your score.
Use Credit Boost to Boost Your Credit Score
You can get a credit report for free with just your ID number and no credit card details from Credit Boost. We’ll provide you with a full, comprehensive credit report that lists all your debts, whether you have missed or late payments, your credit score, whether you have derogatory marks (such as default judgments or sequestration), and your credit utilisation ratio.
Free Credit Check
Using this, you can ascertain what steps you should take to boost your credit score. Get a credit report for free online in minutes with Credit Boost. If you have questions about how you might boost your credit score, contact us.