For those who have come out of the other side of adverse credit issues, the light at the end of this dark tunnel is a welcome sight. Settling your debts to the satisfaction of all of your creditors is a great feeling, but the work of increasing your credit score will just be beginning.
Whether you’ve had an Individual Voluntary Arrangement (IVA), Debt Management Plan (DMP) or been declared bankrupt, your credit score is going to be pretty low, whether you’ve cleared them off or not. If you haven’t yet finished your payments, you will have to wait until you have to work on your score, but the moment it has, you can.
What some people don’t realise is that the way you manage your utility bills can have an effect on your credit score, even if you haven’t got to the stage where you’re being threatened with debt collection agencies. If you’re regularly late in paying your gas, electricity or even your mobile phone bill, it can hit your score, which means that pay your monthly bills on time is one of the aspects of your financial management that you need to get right. The best way is to have all of your bills taken care of by direct debit, so you don’t forget.
Whether this feels like something you’d like to avoid or not, getting used to using credit again is important if you want mortgage lenders to view you in a more favourable light. Taking out a bad credit credit card and using 10-15% of the overall available balance will demonstrate your ability to manage credit responsibly over a sustained period.
Avoiding credit can seem like the best option, especially if you’ve had issues with them before, but not using credit at all can work against you, as it will seem like you’re staying away from it because you’re still not able to manage it. Not something that those offering credit really want to see.
A Vanquis Bank Bad Credit Credit Card is something that we often recommend people to take out for this very purpose. We’re certainly not recommending you go back to relying on credit, but managing a low risk, low limit balance (10-15% of your total available) and paying it off each month can give your score a welcome boost.
Another excellent financial product for boosting your credit score is called Loqbox and it operates in a similar way to a savings account. You pay into it your Loqbox for 12 months and you get your money back at the end. As this arrangement is technically seen as a credit agreement, it provides you with a vehicle for illustrating your ability to repay credit. It’s a very popular option for those looking to give their credit status a shot in the arm.
If you’re recovering from money problems and have ambitions of getting a mortgage at some point in the future, then you need to be looking at not just affordability, but also at helping things along by increasing your credit score. The specialist mortgage brokers we work with at Niche Mortgage Info have access to mortgages designed for people in all sorts of financial situations, but it certainly doesn’t hurt to do everything you can boost your status in the eyes of credit reference agencies like Equifax, Experian and CallCredit.
The more you do in preparation for your mortgage application, the better your chances will be. It can really mean the difference between a no and a yes!
For more information on anything discussed here, take a look through our site www.nichemortgageinfo.co.uk.