When you’re a child, you spend your days wishing to be a grown up. House are spent playing in a tiny wooden kitchen, preparing plastic food for any visitors to your café. You are a gifted with child sized vacuums and workshop tools, as you practise your cleaning techniques and work on your building skills. Fake money is spent in your home grocery store, and you happily swipe the little plastic card that magically gets you everything your young heart desires. The reality of adulthood however can prove to be quite a culture shock.
Vacuuming is no longer a fun past time, mealtime prep turns into shoving a frozen pizza into the oven, and that magical plastic card doesn’t get you half of the things you need, never mind desire. “Adulting” is no mean feat and it’s not uncommon to reminisce on the innocence and ease of your childhood with regret, wishing you had taken more advantage of those carefree days.
One of the trials of adulting is the finances of affording to be an adult. Bills come quickly and money disappears just as fast. Expenses rack up and luxuries head to the bottom of the priority list. More often than not you find yourself baffled by the complexities of financial planning and budgeting, wishing you had the money to travel to the exotic places and take the once in a lifetime trip that everyone on social media seems to be able to do. If financially planning makes your palms sweat and your knees shake, fear not. There is a great deal of advice and support available for you, to help you make wise financial decisions and understand the mysteries of the economic world.
One such mystery is the cryptic credit score. What is it? Why is it important? And how can you improve it? These questions will be answered in the information to follow.
What is Your Credit Score?
Your credit score is a number between 300 and 850 and reflects how credit worthy you are. As in most scoring systems, the higher the number the better. This number shows how worthy you are to receive credit from suppliers so the higher your score is, the more likely you are to be accepted to receive credit from potential lenders. Now a credit score isn’t just a number that’s randomly assigned to you at birth, it’s something that can change and fluctuation depending on your credit history. So that leads us to another question – what is a credit history?
What is Your Credit History?
Credit history is quite a self-explanatory term but is the history of credit you have built up through the opening of accounts, the total of your debt, your records of repayment, and other factors that prove how trustworthy you are when it comes to dealing with money and handling debts.
Why is Your Credit Score Important?
So, what’s the big deal about your credit score? Usually points mean prizes, so what’s the prize for having a good credit score? You won’t get a medal, but you will get other rewards. The health of credit score reflects on your whole financial health and could either end up saving you money or costing you money. When you have a higher credit score, it means you are more likely to be approved for further credit agreements while also securing lower interest rates which will reduce your bill over time. A low credit score tells lenders that you are unreliable and a higher liability, so they will be less likely to make a credit agreement with you. If they do offer you credit, it will likely be with a higher interest rate and a shorter repayment term, making it a lot harder to pay the credit back. Even things like making a deposit or applying for a job will be affected by your credit score, as providers and employers use to gain an understanding of your general reliability and trustworthiness. Simply put, a hirer is not going to want to give a position of responsibility to someone who can’t even manage their own finances!
What Can You Do to Improve Your Credit Score?
There are various factors that can cause your credit score to change or fluctuate. Things like your payment history, how much you owe in debt, the length of your credit history, how many credit accounts you have and the types of credit you’ve taken all play a role in determining your credit score. These are the things that you have control over, things you can change to improve your credit score if necessary.
That is good news if you take a look at your credit score and don’t like the result you see, or if you face a rejection from an employer or credit provider due to evidence of unreliability. There are few simple things you can do to improve your credit score that will have a big impact on your financial future.
- Spend more credit!
It sounds counterproductive but building up a credit history will actually work towards showing how reliable you can be. Use credit providers, like Kora Cash, to take out credit you know you can pay back, and you’ll find your score gets a boost from the history you build up.
- Think about where you live.
Have evidence of where you live, regardless of whether that’s at home, in student accommodation or independently, and this will improve your credit score. Additionally, try and avoid moving house too often as this can indicate a certain level of instability which could lower your credit score.
- Use a credit score boosting service or credit builder card.
For a quick boost, use a credit score boosting service. A credit score boosting service is a company that will offer you various different services that give you an instant credit boost. For a more gradual improvement, use a credit builder card. A credit builder card with a low spending limit and interest rate will help you to slowly build you credit score over a certain amount of time.
Educate yourself and take action to get a handle on your finances and a grip on your credit score…. You won’t regret it!
