How I have improved my credit score

Since starting my financial journey I have learned a lot of tips and tricks that I would like to share. And one of those tips is how to improve my credit score. Now, i’m no Martin Lewis but I do know what has worked for me.

I never realised how important it was to have a good credit score especially when looking to buy your own home but now I do. And I have worked hard over the last few years to improve mine as much as possible.

If you are interested in learning how I improved my credit score then keep reading as I share the 4 things I have done to improve mine!

!Quick disclaimer: I am not trained in Finance coaching or credit scores, this what I have done to improve my credit score and research I have found!

Paying off my debt

This may seem like an obvious starting point but unfortunately, paying off debt can effect your credit score.

According to Experian (click on the link if you would like to read the whole report)if you pay off your debt in installments this can effect your score, and if you pay off a low balance before a bigger balance can also effect your score.

“For some people, paying off a loan might increase their scores or have no effect at all. It all depends on your overall credit profile and the type of credit score you’re checking.”

Check Your Free Credit Score | Experian

I only had £4,000 worth of debt and I was paying this off in installments over 5 years, this meant that my credit score dropped by a lot! So I saved up and made a big payment to clear it and my credit score went up.

On Instagram I have seen people paying off thousands of pounds worth of debt and their credit score drops.

If you have a lot of debt always start off by paying off the lowest balance. Yes this will effect your credit score but it is always better starting with the smallest as this will be more manageable.

Be patient when paying off debt, it takes time and your credit score will move around but it is worth it in the end!

Get a credit card and spend on it

I know, I know, I just spent all that time paying off debt and now I am getting a credit card which could get me into more debt.

But hear me out, improving your credit score isn’t all about paying off debt its also about showing the banks you are able to borrow credit.

UK banks plan to hike cost of credit card borrowing | Money | The Guardian

As I had a small amount of debt, I was showing the banks that I am not able to borrow credit which doesn’t look good for buying a home.

So in November 2019 I took out a credit card and started spending on there. I took this advice from Martin Lewis’s Money saving expert site. On there he explains that having a credit card and using it to spend a small amount on there and paying the balance off in FULL on the due date will improve your credit score.

Every month since then I spend between £50 -£100 and pay it off in full and my credit score has improved. I buy petrol and occasionally online purchases.

A quick disclaimer, if you are someone who has credit card debt then this might not be for you. But as someone who only uses this for small amounts each month I am able to control my spending.

Never go into my overdraft

Since being on a budget I have never gone into my overdraft, I always make sure I have complete control over what money leaves my bank account.

I do have an overdraft arranged with my bank account but I have never used it. Just because it is there doesn’t mean I will use it. As according to Experian an overdraft will count as debt on your credit score.

Why overdraft charges are overdue an overhaul

An arranged overdraft is unlikely to have a major impact on your credit score as long as you don’t go beyond your overdraft limit or have payments refused. In fact, if you use your overdraft sensibly and regularly pay it off it could improve your credit rating.(Link to this website)

And having a a current account with the same bank for a umber of years can also improve your score.

Pay my bills on time

Before I started my budgeting journey I used to miss my due dates on my bills. I forgot to pay my car insurance and car tax which left me in bad credit.

I now have a lot more control on my bills and when they are due.

How often do you check your utility bills? – Which? Conversation

When starting your budget make sure you know when your bills are due, that way you wont go into your overdraft, which in turn effects your credit score.

HOW TO BOOST YOUR CREDIT SCORE - Octane Finance

I hope this post has been helpful and you can find some ways in which you can improve your score.

Don’t forget to check out my Instagram for all the latest updates on my journey.

Money lessons I wish I was taught at school

Everything I have learned about money has come from me teaching myself and learned from other people online. I never learned about budgeting, savings, debt or anything to do with finances at school and I really wish I did.

It would have enabled me to understand more about my money and how I can make every penny count.

So this post is for anyone who is unsure how to budget, save and so much more!

Savings:

I wish when I was at school I was taught about savings accounts and how they work. When I left school and started earning money I had no idea which bank to go with and what interest rates are. This meant that I wasted money and when I started my budgeting journey I had no savings.

Everything I have learned about savings is from the internet and the wonderful people over on Instagram.

I have now learned that it is important to save at least 10% of your wage, this will help with any unexpected expenses and emergencies!

Debt:

I was not taught anything about debt, I had no idea that you could use credit cards and spend money that wasn’t yours. One thing I do remember is hearing my parents talking about debt and how bad it is but everyone has some form of debt so its completely normal.

I was so confused by this because at the time all the adverts on TV was telling me to get credit cards, and payday loans great for your credit score etc.

It wasn’t until I started my journey that having debt is not a good thing, and it is not something I should have.

Debt can not only effect you financially it can effect your mental health, the stress of worrying about being able to pay of thousands of pounds worth of debt!

The best way to avoid debt is by having an emergency fund so you are prepared for any unexpected expenses.

Budgeting:

Budgeting is so crucial to your financial freedom and again I had no idea how to do this and how effective it is.

Having a budget no matter what your method allows you to be in control of your money, increase your savings and work hard towards your goals.

I use the zero based budget method and for me it has helped massively.

Check out my post on different budgeting methods that can work for you!

Buying a house:

I did not realise how expensive buying a house was in my head it was something that all ‘adults’ could afford as everyone was buying houses. It wasn’t until I started looking into how much it costs to move I was shocked.

You need at least a 5% deposit of the value of the house you are buying. But with the global pandemic this figure is changing all the time. My boyfriend and I have nearly £30,000 saved which is roughly 15%. But there is also other fees that you need to account for. So please do your research before you start this process.

Not only does it cost a lot of money it takes a long time to move , sometimes it can take 6 months and other times over 12 months.

Pensions:

I thought you didn’t need to start saving for your pension until your ‘older’ but since companies auto enroll people into their pension scheme at the age of 21 it has got me thinking.

I remember learning about pensions at school, but I didn’t learn a lot. Just that when you get old you are giving a pension that helps you live.

I pay into my company pension but I am also considering paying into a private pension as this money will not be enough.

I have learned that it is never to early to start saving for a pension and this is on my to do list for next year!

There is so much more I wished we were taught at school about money and fiances but this post would be hundreds of pages long!

Is there something you wish you were taught at school?

Let me know!

Hannah xx

Welcome back to my blog!

Hello and welcome back to my blog.

You may have found me from my Instagram page budgetwithme1 . On my Instagram page I share daily savings updates, money saving tips, meal prep tips and much more. So please check out my page.

I haven’t posted on here in a while and its because life has got in the way, however I’m back and I am determined to write a blog post at least once a week.

If you are new to my blog then hello to you! On this blog I am going to be sharing money saving tips that I have learnt over the last 2 years, and my savings journey.

On this post I will be talking about 2019 and how this was my year!

A bit of an update:

I feel I should give a little bit of an update as I haven’t posted since may last year! 2019 was an amazing year for me, my savings were increasing every month and I loved every minute. And towards the end of 2019 I was also in the Sunday Times Money Mentor to celebrate my saving success. (you can read my story by clicking on the link above)

What went well in 2019?

2019 had its ups and downs for me financially. I learn’t so much about myself and how I was wasting money every month. So lets start with the positives;

  1. I was able to save £5,588.92 towards my house deposit
  2. I created saving pots with Monzo
  3. I learn’t more about my spending habits
  4. I cut many bills (saving a lot of money!)

Saving £5,588.92 last year was an amazing achievement, it made me realise that i can save money if I put my mind to it and work hard. I saved this money but not eating out as much, planing in advance for days out, holidays etc and completing paid online surveys every week. On average I was making £80 a month answering questions on a variety of survey apps.

I also cancelled many of the unused subscriptions that I hadn’t used in so long this saved me £100’s! Which allowed me to save more money in the long run. My biggest expense was my PlayStation 4 online access which I never used, this was costing me on average £30 a month, for something I never used.

Over all 2019 was successful however there were some fails….

What didn’t go well in 2019?

In 2019 I saved £5,588.92 towards my house deposit and this was a huge success for me. My original goal was to save £10,000 towards a house deposit however things didn’t go to plan. From car repairs, to buying new glasses the beginning of 2019 was an expensive one that I was not prepared for.

The worst thing was I didn’t have any emergency funds set up in May 2019 which meant I had to use my savings for my house deposit to pay for a lot of expenses. This set me back by nearly £1,000 which was very disheartening, I would have lost motivation if it wasn’t for the amazing community that I have found on Instagram.

I also had some family issues which meant emotional spending on food, clothes and items that I didn’t really need. I remember spending £80 on clothes that i didn’t really need nor did I wear most of them!

Have I learn’t from my mistakes in 2019?

I have learn’t that I do need emergency funds, I need to save more money for lives unexpected expenses such as car repairs and new glasses! That way I wont have to touch my house deposit savings. Since May last year I have learn’t that I need to have more self control over my spending and really think about how much I am spending and if I really need the items I am buying.

Overall I have realised that even though I made many mistakes 2019 was also a fantastic year of learning. I learnt how to save for different social events throughout the year, how to save money for Christmas, and how to meal prep like a Queen!

Thank you so much for reading this blog, my next post will be all about my 2020 goals and how I am going to achive them.

Speak to you all soon.

Hannah xx