3 Steps to Maintain a Good Credit Score
Your credit score stays with you for your entire life. While there are things you can do over time to repair a bad credit score, there is no way to start from scratch.
And that’s important to keep in mind, because your credit score needs to be good in order to secure home loans and buy property. Lenders will be far less inclined to trust that you’ll reliably pay them back if you haven’t demonstrated a history of making payments on time and without issue.
The best thing to do is obtain and maintain a high credit score. That will make it easier to secure loans, get better deals and buy your dream home or invest in a lucrative property.
But even if your credit score is poor, you can improve it over time. It won’t happen overnight, but if you follow these three steps, your credit score will gradually improve:
If you don’t have a long credit history, lenders will not favour you. Without a track record, it’s impossible for a lender to determine whether or not you can reliably make payments. This puts you in the high risk category – not an appealing prospect for a lender.
The best way to combat this is to have credit accounts that are regularly paid for in full and on time. If you’re uncomfortable with credit cards: Mobile phone plans, internet accounts and utility accounts also factor into this.
This one is simple to understand, but not always so simple to adhere to. A long history of making payments on time goes a long way with lenders.
It’s important to understand that missed payments can sting your credit rating more than you may realise. Missed payments can stay on record for a long time, so be sure to make payments at all costs if you want to maintain a good credit score.
Avoiding payment defaults
Payment defaults cause serious harm to your credit rating, and they can stay on your credit report for five years. Furthermore, events such as bankruptcies and clearouts can stay there for seven years!
Even if you’re wrongly billed or wish to dispute a bill, it’s better to pay it first and then dispute it. That will keep your credit score in check regardless of outcome. The problem won’t disappear simply by ignoring it – in fact, ignoring a payment entirely might kill your credit score entirely.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.