How to look more appealing to banks

To increase your creditworthiness and beat the Credit score UK national average here are a few simple life hacks that you can do today…

I covered in my “Boost your credit score: step-by-step guide” blog how to use your credit card in a way that will improve your credit score. In this post I want to reveal a few other tips and tricks that I have come across to help increase your chances of being lent money.

Now I appreciate credit cards, loans and credit cards are not enthralling topics to talk about but these basic principles are important so hopefully by the end of this post you’ll be able to take away a few financial nuggets of information that were (fairly) easy to digest and put them into practice.

Let’s dive straight in!

Tip #1 – sign up to the electoral register on the gov.uk website and update this every time you move and change address.

Yes, it really is that simple. Small things like this will notify all credit agencies of your previous addresses and that track record history goes in your favour.

N.B.* When you register with the electoral roll there might well be an “opt-in to marketing” version of the register, however, stick with the normal/closed register. On my credit report it was flagged up by Transunion that I had clicked on the former by accident and although my ‘marketing status’ had no direct effect on my credit score, the edited register is available to be purchased for any purpose, so those registered on it could be at higher risk of falling victim to identity theft.

How do I fix this? You contact your local authority/council and request to opt out.

*(N.B. stands for nota bene – “note well” – used to draw the attention of the reader to a particular sentence)…something I just learned today!

Tip #2 – Pay off your credit card bill every month in FULL and do not exceed the 30% threshold of your maximum credit card limit (unless it is an emergency)…this was covered in my previous blog post but not to be overlooked.

Tip #3 – If you apply for a loan/credit card/mortgage (known as ‘hard searches’) you must wait at least 3 months since your last hard search to do so in order to avoid damaging your credit score ± getting your application rejected.

What is a hard search?

The term ‘hard search’ is interchangeable with ‘hard inquiry’ or ‘hard pull’ (but the latter two are more commonly used over in the US).

According to Investopedia, a hard search is = “a type of credit information that requests your full credit history and credit score from a credit agency”.

Please see my blog post on “The Credit Score: unveiled” to see what credit agencies I am referring to.

A hard search takes place when you are applying for a loan, credit card or mortgage (this list is not exhaustive) and will temporarily reduce your credit score as the lender decides whether to give you their money or not.

Whether your application is accepted or rejected, the general rule of thumb is to wait 3 months before you carry out another application that would require a hard search. I have looked into why “3” is the golden number but could not find a reason, however, the general consensus is that if a bank/lender can see on your credit report that you are applying for multiple credit cards all within a short period of time – it doesn’t look good, does it?

Since humans love an example, here is a real-life one that happened to me last year:

My barclays credit card limit is £1200 and I knew that after my experience being stuck in India where I had to pay for an emergency flight out, my credit card only just covered it. Therefore, I wanted to increase my credit card maximum limit so that if I found myself in another emergency, I would not have to worry about hitting my credit card ceiling.

I phoned up Barclays in April 2020 and proposed an amount I wanted them to increase it to, which was politely declined (…lol) and since this counted as a “hard search” (etched into my credit history for 24 months), I had to wait until July/August 2020 before I approached HSBC for a credit card with a higher threshold, which was accepted this time (phew).

In summary: hard searches are fine and a way of life but as long as you space them out by at least 3 months then your credit score will not be badly affected.

What is a soft search?

A soft search is a less thorough version of a hard search and NOT reported on your credit report so you can carry out as many soft searches as you like and it will not affect your credit score.

Examples of a soft searches are:

– You request your own credit report from Experian (1/4 credit agencies),

– A new employer searches your credit file for identity checks,

– You want to take out a new iPhone (or Android…why?) contract and put it on a direct debit payment plan.

Right. The End. We finally got there. 

NEXT TIME: I will dedicate a whole post on credit agencies and how to find FREE ways to access your credit reports.

WEEKLY HEALTH FACT: To do with actual health and not financial health…

If you live in the UK you are bound to be vitamin D deficient, regardless of your ethnicity, and most vitamin D tablets that you buy over the counter only give you 12.5% of what your body actually needs. Look for sublingual sprays and/or tablets that contain up to 4000 I.U (international units), as that is the real daily requirement.

FYI….I go to Holland & Barrett for my vitamin D supplements.

As always, a gentle reminder that this blog is not financial advice but just my opinion and a platform to share with ordinary people what I have learnt.

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