People regularly checking their credit score have been alerted to a simple yet costly error that could be secretly undermining their financial standing. New data reveals that online searches for the phrase 'does checking your credit score lower it' have skyrocketed by an astonishing 3,700 per cent in recent times. Concurrently, queries for 'how to increase credit score quickly' have also seen a significant rise of 2,550 per cent, indicating widespread concern over credit health.
The Electoral Roll Oversight
According to Charlie Evans, a personal finance expert at Compare the Market, one of the most overlooked factors is neglecting to register on the electoral roll. He emphasises that this omission can make borrowers appear riskier to lenders, even if they have a flawless payment history with no missed instalments.
"Lenders utilise the electoral register as a key tool to verify an individual's identity and address," Mr Evans explains. "If you are not registered, it could potentially make you seem like a higher risk candidate. It is crucial to check and ensure you are properly registered to avoid this pitfall."
Other Hidden Credit Score Dangers
Mr Evans further outlines several other common behaviours that can negatively impact your credit file:
- Financial Links Through Joint Accounts: Sharing a joint account, mortgage, or even a household bill can financially connect you to another person. If that individual misses payments, it might adversely affect your own credit file as well. Therefore, it is vital to be cautious about who you are tied to financially and maintain open communication.
- Frequent Address Changes: Regular moves can sometimes be interpreted by lenders as a sign of instability, particularly if your records are not updated consistently across all platforms. Where possible, try to maintain consistency in your residential information.
- Having a 'Thin' Credit File: While living with parents or completely avoiding credit might save money in the short term, it can result in a 'thin' credit file. This makes it more challenging for lenders to assess your creditworthiness. Even small commitments like utilities and mobile phone contracts can help start building a positive credit history.
- Closing Long-Standing Accounts: Although it might feel helpful to tidy up unused credit cards, some lenders prefer to see a longer credit history or available credit. Closing longstanding accounts may reduce the length of your credit history or your overall available credit, which can be damaging. In some cases, keeping an account open but unused is less harmful than closing it outright.
- Cash Advances: These are often viewed as higher-risk financial behaviour and could have a negative impact on your credit score. It is advisable to avoid cash advances as much as possible to protect your rating.
Understanding the factors that influence your credit score is essential for spotting issues early and safeguarding your financial options, whether you are considering a loan, a credit card, or a major life purchase in the future.
