If you’re hoping to purchase a new vehicle or secure financing for a property purchase in the UK, your credit score matters. You have to establish a strong score to earn the trust of lenders. But if you’re operating within the traditional system, you face a limited scope of opportunities to prove your trustworthiness and improve your score. With open banking, however, it’s possible to gain traction with lenders courtesy of shareable financial data.
Don’t let a poor credit score hold you back. Read on to learn how open banking can give your credit score a boost!
Grant Secure Access to Your Financial Data
Thanks to open banking, you can now share your financial account information with lenders. The previous way of doing things relied on time-intensive processes, like submitting physical pay slips or waiting for lenders to review your application. Today, you don’t have to wait.
Lenders can check your financial transactions and spending patterns. They’ll be able to confirm your income through bank deposits and verify that you’re making rent payments. Any other transaction, like a utility bill or educational payment, will be visible. In short, you’ll offer a more comprehensive picture of your fiscal responsibility. Just be sure to use a provider to connect your financial accounts that has backing from the Financial Conduct Authority (FCA). Otherwise, you could leave your personal information vulnerable.
Use a Starter Credit Card
Opening a credit card account is one of the best ways to demonstrate financial responsibility and build credit. A credit card used in conjunction with a banking account, for instance, can show that you manage your money and avoid debt. You can even find bad credit credit cards, which are specifically designed to help improve your credit score. You won’t be hit with hidden fees if you apply and are accepted for one of these cards. And you can start working toward a better financial status by making regular payments.
Turn to Autopay
Are you forgetting to make on-time payments for utilities or other bills? You might just be prone to forgetting, or maybe you just moved or changed jobs and faced some distractions. Since missed or late payments can tarnish your credit score in a hurry, consider setting up autopayments. You can use open banking to do this, helping you avoid missed payments in the future.
Better yet, you can schedule payments on certain days. That way, if you’re expecting a paycheck on a Monday, you can schedule a credit card payment on a Tuesday. This helps avoid cashflow problems. It also gives you a sense of predictability with payment timetables. Aim to pay the full amount on any bills, too, to steer clear of incurring more debt.
Check Your Progress
Credit Reference Agencies (CRAs) in the UK now weave information from open banking into their credit assessments. In other words, simply making on-time payments and painting a positive financial picture through your banking statements can help your credit score.
Make a point of checking CRAs each month to see how your score is changing. When you see it tick up, you’ll feel confident and want to continue making improvements. You’ll also be able to find potential errors and dispute them.
Look into Open Banking
Open banking has opened the door to rebuilding credit scores in the UK. Residents can trust that CRAs are using open banking data, and, as a result, they can take control of their financial situation more easily. Using starter credit cards, setting up autopayments, and monitoring progress are among the key strategies consumers can take. With consistent efforts, it’s possible to boost your credit score and gain access to more opportunities.
Founder Dinis Guarda
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