The last couple of Adulting posts I have done have focused mostly on finances, and the more I look into these posts and actually write them, the more I realise how little I know about the financial world, and my own financial records and health. After realising this, I decided to begin wading into the murky waters of credit scores.
* disclaimer: all thoughts in this post are my own, and have not been influenced or supported by mentioned companies, organisations, or adviser.
I feel like everyone should really know what their credit score is, and even more importantly, what their credit score means. I don’t think I realised just how important this was, and how many things there are that you can do to change it, sometimes without realising you are affecting it at all.
I am lucky, when I looked into my credit score, it wasn’t because I needed money/credit/loans. I did it solely because I wanted to know how good/bad it was and how to improve it so that when the time comes, I have as good a score as I can have.
So, to start with, I had to find somewhere to actually get a credit score rating. I read around a little, asked friends, and sought the advice of money saving expert (other advice sites are available). Getting the rating was the first, and probably most important step, int he whole thing. I have read, more than once, and heard from others, that actually checking you credit rating has an affect (usually negative) on the overall score, but I have a right to know the data and think it’s important, so I’m doing it anyway!
Until I knew more about it, I opted to use clearscore,com, mainly because it was free, and also because it seemed to be simple and quick to use. It didn’t take long to sign up, and I felt like my details were being securely kept. The bonus aspect, they never asked for card details, so I knew I didn’t have to remember to cancel anything down the line.
After obtaining my score, I used the site along with other information pieces I found to ascertain my actual rating’s merit. Considering my age and complete lack of credit history, my score is surprisingly alright. With this in mind, I started to look at what influences the rating, and was pleasantly surprised by how many little things contribute.
I always thought that credit cards were bad, debt was to be avoided, and while this fits with credit ratings, it has left me with little clue what factored into a credit check. For many years, I have had direct debits for phone bills, and gym memberships, without realising that these have been creating a nice picture on my credit history. Factor in the bills, contracts, and other monthly outgoings I now have, and I have a reliable financial portfolio set up that I never realised affected my score, for the better it would appear too.
Credit cards, of course, have a large affect. I have been weary of using them, which is probably a good habit to have been in, and have always used them sparingly and paid them off instantly. I now have multiple credit cards with different providers, that have differing credit limits. I still use them semi-sparingly, and pay them off regularly, like advised. I always thought that paying credit cards off as soon as money way spend on them was the best course of action, but after reading the advice on clear score and other providers, staying within reasonable credit limits, and making regular payments, is the best way to amass a good credit score.
I still don’t fully understand my whole score, I just know I want it to be as good as it can be when I come to take out a mortgage/loan, so I am following guidance provided by as many sources as possible. I am using less cash and more traceable bank payments, I think more carefully about what I spend my money on and how I spend my money when I buy things.
It’s yet another thing to add to the adulting list that will hopefully pay off down the line.