Financial advice 101 | Improving your credit score

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Boosting your credit score is something everybody wants. It makes it easier to get loans and score phone contracts for example. But getting the score high won’t be easy. The thing is, a credit score keeps a record of years into your past and the worse it is the longer it’ll take to straighten it out. There’s a lot you can do to get your credit score in its best shape, but it’s going to require a lot of discipline and patience.

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What affects your credit score?

Well, before diving to what you need to do to raise your score, you first need to know what not to do. You have to know what impacts your credit score and how. Here are some of the most common things:

  • High levels of debt. Existing debt taints your score a little and the more you have, the worse the effect. Banks and other lending institutions would not want to add debt on debt.
  • Multiple credit card applications are also a red flag to lenders, so you need to be careful about how many applications you make. Check the eligibility criteria carefully because such applications show on your record. Lenders see multiple applications and turn away as it shows you’re failing to get the credit you need.
  • County Court Judgement (CCJ) on an unpaid bill leaves a long lasting mark. It’ll last for up to 6 years on your record.
  • Constantly moving is also a bad act in the world of credit scores. Lenders normally ask for your addresses the past 3 years and if you’ve moved a lot, then you may have a low score.

What to do to raise it?

Now that you know what affects the scores, here’s what you can do to raise your credit score much higher.

Register on the electoral roll

This is perhaps one of the easiest ways to raise your credit score standing. The effect is that it’ll confirm your name against a fixed address, and this information is valuable to the lender. Remember, your address plays a lot in determining your credit score so once your identity is ironed out, then you can be assured of a better credit score.

Pay your debts in time

Debts are the number one flag that lenders spot when generating their credit rating. Late payments are an even worse scenario. They’ll show on your records and really lower your score. To lenders, late or missed payments are a sign that you’re not really responsible when it comes to paying your debts. That places you as a high-risk client that they’ll avoid at all costs.

However, paying your debts in time proves that you’re a safe client and less risky. You’ll therefore have a higher score if you pay all your debts in time.

Close joint accounts with bad records

Guess what? Financial associations also matter. If you’ve got a joint account with someone that’s has a poor rating, then the effect will rub off on your score. Lenders make the assumption that your partner has an impact on your income so get rid of such accounts and pay any shared debts fully.

Financial tips for start-ups and small businesses

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Having a start-up is a huge step. According to a study by Bloomberg, about 80% of start-ups fail within the first year of their launch. And that’s a pretty huge number. One of the major reasons why these start-ups fail is because of poor financial planning. If you’re just starting your business, then you need to ensure you don’t fall into these stats. Here are working tips to help you beat the odds and manage your businesses’ finances better.

Paying attention to human capital

Here’s something that most start-ups fail to do- delegation. In most cases, the CEO and founder of the start-up does most of the work. They are the janitor, the receptionist, the salesperson and the CEO. Hiring people to do these extra tasks is considered as extra expenses and businesses simply try and absorb all the tasks.

That’s generally a huge mistake. While it’s important to keep your costs low, you need to value human capital. Human capital is what’s going to make your start-up turn to a successful business, so if you spend too much time away from the actual idea, then you’re slowly killing your start-up.

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Start lean

No matter how much faith you’ve got in your business, the beginning is not the time to get all that fancy equipment you’ve always dreamed of, or go for expensive business trips. You need to cut as many costs off your list as possible.

Think about the investment you’re making rather than simply spending. Before using a coin, think of the potential returns it’ll bring back. If the purchase would logically lead to increased profits over a period of time, then it’s worth spending money on it. Also, try and look for affordable options.

Secure some start-up funds

You need to have a pretty good idea of how you’ll get the funds for your business, and practice caution. You may have angel investors interested in your start-up but you should be aware that they’ll have a stake in your company. Bank loans are an effective option. However, you’ll need to have a credible standing when it comes to your credit score. There are other options such as personal loans from friends and relatives or even doorstep loans that could further boost your financial situation. Whatever source you choose, you need to be well aware of the effects they’ll have.