Now that the fun of Christmas is becoming a distant memory, the treat that we have to look forward to this month is the credit card bill! I don’t know about you, but we tend to put a little away each month throughout the year towards Christmas, though we do then use the credit card for any extras. Fortunately, we tend to be in a position to clear it in January as I like to get it paid off monthly so it doesn’t add up. Credit cards are best used this way, of course, as they help you spread the costs and as long as you’re paying them on time they will help your credit score. It’s not always that easy, though, is it?
According to a recent survey, one in six British families borrow nearly £685 for Christmas each year and the lifetime cost of family Christmas’ certainly adds up, at an average of £35000 – just wow. This is all very well, and if it can all be paid off this month then that’s just great, but what about those of us who will struggle to do that?
If you are borrowing, it makes sense to borrow at the lowest possible rate and then pay it off as quickly as you can, as less interest will then accrue.
But to get the best possible credit rates, the chances are that you need to have the best possible credit score. For example, that £685 borrowing with a poor credit score could end up costing £3,259 in interest on top of the original debt across a lifetime, whereas someone with an excellent score could be paying £1,766 in interest, quite a big difference.
In order to improve your credit score, here are a few tips courtesy from the team over at ClearScore:
1. Sign up to see your credit score – you can get can your free score and report at ClearScore and track your progress using their Timeline.
2. Check your report thoroughly, regularly and always before applying for credit – report and correct any mistakes you see as this could be damaging your score.
3. Make sure that your bank and any credit providers have your correct address.
4. Ensure you’re registered on the electoral roll – this is a very simple way of boosting your score.
5. Make sure that your name is on some utility accounts – the greater the evidence that you borrow and repay your credit regularly, the better your credit score will be.
6. Your score will increase if you use a smaller percentage of your available credit limit.
For more information and tips on how to improve your credit score, head over to ClearScore.com.
Hope these can help and here’s hoping we all have teeny credit card bills this month…
Disclosure: This is a collaborative post