A Guide to Keeping Your Credit Score on the Straight and Narrow

This will not come as a surprise to many mums around the country but raising a child in 21st century Britain is a costly endeavour. By the time our kids are ready to fly the nest we will already have spent hundreds of thousands on them. What’s more, most of us are battling a rising cost of living and employer wage repression as well as an era of austerity that still hasn’t ended no matter what Downing Street may say. As such, parents of all ages are finding increasingly that their wages are insufficient to keep them financially afloat. This leads to the inevitability of borrowing and debt. While there’s nothing inherently wrong with this, debt like any household expense needs to be carefully managed. If we allow it to spiral out of control and into arrears it can be damaging to our credit rating and prevent us from getting access to good sources of credit with advantageous interest rates.

If you want to keep your credit score on the straight and narrow, it’s in your best interests to…

Know what makes your credit score

The better you know the factors that determine your credit score, the better able you are to keep it healthy. Your credit score is shaped by:

  • The types of credit you’ve had- From student loans to credit cards and mortgages, not all credit is created equal.
  • Credit history- How much you’ve borrowed and how well you’ve paid it off.
  • Total debt– How much you owe overall.
  • Payment history- How well you manage to pay back your debts.
  • Recent credit- How much a lender allows you to borrow.

Know the cost of borrowing

Clearing your debts is all about knowing how much it costs you to borrow what you need and budget accordingly. Unfortunately, not all of us are aware of the total cost of our borrowing. Many of us don’t know the difference between interest and APR for example. Fortunately services like CreditRaters.com make the difference as transparent as possible for you. The APR is more than just your interest rate, it’s the composite cost of your borrowing encompassing not just interest rates but any inherent fees and charges.

Supplement your income

Clearing your debts is all about ensuring that you have enough money in the kitty to make your agreed repayments. If your income has become inadequate to do this there are a range of ways in which you can supplement your income without putting in laborious overtime at work. Setting up a side hustle is a much more enjoyable way to make money and bring balance to your household finances and could even become a successful business that opens up a whole new career path.

Always be budgeting

The key to successful household finances is budgeting. Budgeting allows you greater control over your income and expenditure and allows you to allot sufficient cash to repaying debts. If, however, your debts are growing too difficult to manage it may be worth consolidating your debts. A consolidation loan could make your debt repayments smaller and easier to manage. Since it replaces all of your existing debts it can even help to improve your credit rating.


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