As you work through your 20s you definitely grow up more in most cases. It is the time in your life where your employment starts to take shape, where you build relationships, and in many cases learn to stand on your own two feet away from family support. Whether you are living in a shared house, with a partner, or alone, it can be difficult to save and build a good credit score in your 20s, but it is possible. Whether you are seeking short-term financial assistance in the form of a payday loan, looking for a larger credit agreement or hire purchase, or saving with a view to a mortgage and owning your own home in the future, it is important to understand how you can build good credit in this important decade in your life.
If you have bad credit, or no credit at all, it can have a massive impact (in a negative sense) on your ability to acquire all of those things above and to build a solid foundation for the future. Here are a few simple steps you can take to improve your credit score and to ensure you are moving in the right direction.
Check for Inaccuracies
You have the right to ask for a copy of your credit file from the three primary UK credit bureaus. These are TransUnion, Equifax and Experian. Take a look at your file and make sure that everything within it is accurate, including your name, date of birth, address, as well as everything else that is included in it. If you find anything that is wrong, or debts that you dispute, make sure you request they are amended or removed as soon as possible.
Live Carefully and Methodically
Make a spreadsheet of your incomings and outgoings each month and make sure that you create a strict budget that you stick to. This should include all bills and debt repayments. By sticking to a budget you know exactly what you have to play with each month, including grocery shopping lists and budgets, and it ensures that you are never late with payments or miss them entirely (which can impact your credit score). If you have enough money, get into the habit of putting money into savings each month, even if you start as low as £5 per month, it will help you save long-term.
Debt Management Plan
Whether you have some credit card debt, small personal debts or larger debts to pay back, make a list and ensure you are never late with making repayments. For some people the best approach is to tackle the smaller debts first, paying them off quickly and getting that sense of achievement that you are getting somewhere with paying off your debt. For others, consolidation of all debt into one debt that can be paid off monthly is a more effective approach.
It is difficult to move away from bad credit, but if you put together a solid plan of action as early as possible you can face it head on and build good credit over time that stands you in good stead for the future.