Hi love bugs, I have a guest writer today! yay!
I invited Benedicte Kuhanuka founder of Christian Chickz to 10ftchopsticks to help us improve our credit rating and explain how to improve credit in 5 easy steps. Credit is so important and wanted to get someone who knows more about the subject to write this piece.
I've known her for a little while from university and she's such a sweetheart and comes across so well so hopefully I will ask her to write again soon, read what she had to say below.
Recently, as I've progressed in my career and increased in age, one of the things I have started to think about is CREDIT. This is a word I hear all the time.
Now if there’s anybody reading this who knows me personally, you will know fully well that I absolutely LOVE to shop. I love clothes, bags, shoes, makeup, food, cars. Come to think of it, I spend money on just about everything [sigh]. My savings skills used to be absolutelyabysmal,awful, actually no let’s go with with horrific........UNTIL I realised that I’d been working for 3 and a half years with absolutely nothing to show for it apart from some nice shoes (and some REALLLLYYYY nice bags).
Anyway, I've just realised that I've completely digressed from my original point which is actually the importance of credit rating. If permitted, I will later write a post about saving! For now, I have 5 points that I believe are crucial to improving your credit.Today’s economy is run on credit; borrowing to spend and spending to acquire. This is in essence economics in the UK in a nutshell. [in the most basic simplified form. I'm a lawyer guys, not an economist so don’t shoot me] If you want to make the most of this credit-run world, you've got to get ahead of the game.
So here’s my 5 tricks on how to play J
1) Take out a reasonable overdraft
Yes, I said it...take out credit to improve your credit. If you are like me who one day hopes to own their own home; it's very likely that you will have to take out a loan/mortgage with a bank or lender to afford this (the joys of living in Britain eh?) Now it doesn't take a genius to work out that the British economy isn't at its best right now. This has led to lenders being more sceptical to lend money to people unless they are sure that the person is financially trustworthy.
The only way to prove that you can pay back borrowed money is to pay back borrowed money!
So if the bank have proof of you being able to repay your overdraft each month, then they would be a lot more open to lending you money for your home.Overdrafts tend to be fairly easy to take out in comparison to other loans and the requirements for them are a lot less stringent because overdrafts are not long-term liabilities.
The best method of taking out an overdraft is to use the account that you get paid with. That way, your bank account has a healthy cycle of income and outcome and it also means that your overdraft is repaid every month.
2) Don't use ALL your overdraft
Sounds like I’m talking rubbish right? Well I’m not! LOL. If you the bank gives you a £500 overdraft and you use £498.00 EVERY MONTH, that means that you obviously can’t afford your lifestyle because you a) spend beyond your means or b) earn less that what you spend. Either of those options is not a good look for somebody who wants to lend you money. Instead, if you do have a £500 overdraft, why not use £300 a month? That shows the bank that you’re not totally dependent on your overdraft because your own money is sufficient to cover your account expenses.
No, I’m not campaigning for you to vote Labour (or maybe I am J). The point here, is actually being on the electoral roll. This is because, if you ever want to take out a loan, a lender will always do a reference check to confirm that you are the person applying for the credit.
This is a security measure taken out by lenders that reduces the risk of fraud. If you are on the electoral roll, that means that your name is registered against an address, which gives an almost bonafide way of proving that you are you. “Yes, but I can bring my utility bills”. While bills do prove some sort of identity; the electoral roll or register is an official government database. If I’m about to lend you £200,00 for a home, I’d much rather that you were on the government database than you showing me your TMobile bill...but that’s just me. Accidentally lending the wrong person 200 grand doesn’t usually sit well with banks.
And of course, dare I mention the fact that you can actually VOTE when you are on the electoral roll. You can actually exercise your right to make an impact to the UK, by choosing which liars, political party, comes into power for the next 5 years.Most people make the mistake of assuming they are registered. Don’t be most people. Check https://www.gov.uk/register-to-vote to register.
4) Make Direct Payments
This is probably the easiest of my 5 tricks. Nowadays most mobile phone contracts, gym memberships, insurance covers are done by direct debit.
When you have direct debit payments that are regular and ON TIME, this proves that you are able to pay for what you commit to. It also shows that you allow yourself to have enough money in your account for what you need. Even if you are renting a place, try and see if your landlord accepts direct debit payments. Or if you pay for your travel monthly, try and see if you are able to organise an automatic payment to cover the cost of your travel each month. Any way you can make direct debit payments for something you do regularly; DO IT!
Also, because the payment is automated, it means you won’t have to worry about forgetting to pop to the bank or transferring the funds because it’s all done for you. Which means you don’t have that risk of missing payments – providing the money is in your account of course.
5) Sign up to Creditexpert.co.uk
This is honestly one of the best things I’ve done this year. It gives you a DETAILED breakdown of your credit history including if you’ve ever defaulted on a payment, anyone who’s ever done a credit search on you and it even gives you a score rating out of 999.
It was actually by singing up to Experian Credit Expert, that I managed to find out that I wasn’t on the electoral roll and after registering my score went up by 52 POINTS!!
You get a one month free trial, where you have access to your full report, and then it’s an optional £14.99 monthly fee after that. The free trial is good if you just want to take a look at your credit rating for interest. But if like me, you’re working on building your credit and maximising your score; you can track your progress every time you log into your account. If you do want to leave, you can simply write to them and cancel your membership.
After signing up for Experian Credit Expert, I found out that I had missed some payments on my student account way back when I was university (I say way back but it was only 3 years ago. I’m forever young J). Experian provided me with the contact details of the relevant department to get in touch with and I managed to arrange a way of paying back the amount in affordable instalments.
If you want to eat with the Big Dogs,you've got to be a Big Dog. And being a Big Dog means you have to learn Big Dog tricks. Only the Big Dogs will get this *cool face*
You can get in contact me with via email benedictek@hotmail.co.uk and if I'm not at work or the gym or church for that matter, then I’ll happily reply :)
Much love to Benedicte for writing that piece, I found it very useful. I hope you all did too! Please leave feedback and comments.
Be you and Be true to who you are.
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