Whilst at Salad Money we’re proud of our “More Than Your Score” loans, good credit is one of the most important factors that help you determine your financial well-being. Not only does it affect your creditworthiness but can also help determine interest rates on loans. That’s why understanding creditworthiness and maintaining a high credit score can help you achieve your financial goals and make your life easier.
However, when it comes to good credit, there are a large number of factors that help build a good credit score. These factors may include your payment history, existing types of debt, credit utilisation and so much more.
When it comes to building good credit, it’s never too late to start. Regardless of whether you have a low credit score or no credit history at all, you can start improving your credit with a few simple tips. These tips can be anything from taking out a credit card and using it responsibly to acquiring a small personal loan and paying it back on time.
While building credit is a task and takes time, maintaining good credit is a completely different ongoing process. Not only will it require discipline but also careful planning. However, if you execute it properly, you will never have problems with credit.
In this blog, we will explore the concept of good credit and a few simple tips for maintaining and improving your credit score. By understanding good credit and the different factors that affect your credit, you can start to take control of your finances.
What is Good Credit and Why Is It Important?
In essence, a credit score is just a numerical representation of your creditworthiness based on various aspects of your credit report. To make things more confusing, different institutions use different ways to calculate credit scores. However, on average, a good credit score is around 700 or more, depending upon your lender.
There are many reasons why having good credit can benefit your financial health. Along with providing you with greater financial freedom and opportunities, good credit can also help you get better interest on loans. This can potentially save you a lot of money in the long run.
Furthermore, although there are no minimum credit requirements to rent an apartment in the UK, some landlords can also check your credit score to ensure you’re a reliable tenant.
Improving and Maintaining Your Credit Score
While there are a number of different ways to build good credit, we are going to give you some simple and easily achievable tips. Here we go!
1. Paying Bills on Time
One of the most crucial aspects of improving and maintaining your credit score is paying your bills on time. Failing to do so can not only have a negative impact on your score but also stay on the credit report for up to seven years.
Late payments can result in additional charges, late fees, and lower credit scores and thus, are an overall burden on your credit. That’s why you need to make sure that you are setting up payment reminders to keep track of your due dates and pay your bills on time. This will help you maintain your credit score and gradually improve it.
Because individual financial circumstances are rarely as simple as “just pay your bills on time”, we created our “More Than Your Score” loan, available if you’re in employment and need a helping hand. Find out more, today.
2. Maintaining A Low Credit Card Balance
Low credit card balances indicate responsible credit utilisation, which can mean a better credit score. Credit utilisation refers to the amount of credit you are allowed to use in comparison with the amount you are using. This ratio is recommended to be kept below 30%, however, this really depends on your credit requirements. While there’s no rule that says you can’t use your entire credit limit, what you need to remember is that the lower the ratio, typically the better your credit score will be!
To make sure you keep your credit balance low, you can take a few simple steps. First of all, try paying back more than your minimum payment every month. You can also try to consolidate all your credit card debt into one card and keep the rest at a low balance. This will help you pay less interest while also improving your credit score.
3. Don’t Apply For Too Much Credit
Refrain from applying for too much credit at once! This can be seen as a red flag from potential lenders and can also affect your credit score. By opening new credit accounts responsibly and managing them, you can improve your credit.
Moreover, you also need to diversify your credit portfolio. Having a lot of credit cards or personal loans can affect your credit score. By properly diversifying your credit portfolio, you can manage your finances better.
4. Keep an Eye on Your Credit Report
Monitoring your credit report on a regular basis is an essential part of knowing you’re moving in the right direction. Additionally, you want to make sure that all your information is up-to-date and accurate. With important details like your credit accounts, payment history, bankruptcies, etc, you can’t afford misinformation in your credit report.
That’s why if you find errors or discrepancies in your credit report, you need to take the necessary steps to correct them. Although it might seem like a long process, it will absolutely be beneficial to you in the long run.
Monitoring and correcting errors on your credit report can help prevent any negative effect on your credit score and maintain good credit.
Choose Salad Money for Fair and Affordable Personal Loans
Now that you know all about good credit and its importance, it’s time to execute these steps and get the best results.
With our “More Than Your Score” loans, you can avail the affordable personal loans regardless of your credit score.
To learn more about our services, click here or get in touch with us now!