How To Optimize Your Credit Score Step By Step

You have recently submitted one or more credit applications and have literally stumbled over your creditworthiness? This can happen, but rejected applicants do not always know how the bank came to a negative decision.

Actually, everything looked good, but the desired credit is rejected by the bank. This is it, the bad and completely unexpected surprise of the rejected credit. How can this be? Often one is not aware of any financial misconduct. So what went wrong?

The surprise is due to the fact that many consumers are firmly convinced that open credit debts alone are reason for rejection. Unfortunately, this is not true. Several aspects can have a negative impact on creditworthiness. Therefore, here are a few tips on how you can, with a little luck, bring about positive changes in your score in the register of Agency or other credit agencies. The consumer situation turns out to be difficult when it comes to the question of the value. The Agency has always been reluctant to discuss this issue. Consumer protectors have consistently criticised this lack of transparency for many years.

Worth knowing: → The best possible “basic score” is 100. Anyone who can show it will receive the best offers in credit enquiries. Whereby 100 is in fact an unattainable value, but anything above 90 points is considered highly creditworthy.

The right to information on personal Credit data

To be able to take action, you must of course understand which characteristics are important for Agency. Current loans are in fact only one point of importance for credit agencies when determining creditworthiness. First of all, you should make use of the right to self-disclosure. Consumer protectors complain time and again that many consumers waive this right – often out of sheer ignorance. In fact, a few years ago the legislator made sure, through an amendment to the Data Protection Act, that you can have a data overview of your register entry sent to you once a year free of charge. To claim this right is not only useful in case of acute credit need. You can also find out from the documents whether there may be incorrect or unauthorised entries in the file.

How long do notes remain in the score?

Even if consumers rely on the accuracy of their data: Sometimes errors or obsolete entries occur because deadlines for deletions are not met. This must not happen, but it does happen. Therefore, leaving blind trust is negligent, become active and check entries annually. Normally, entries on credit charges may remain in place for 36 months after full repayment. Entries in debtor registers at local courts and other public data are stored equally for three years. In the digital age, removal from databases is now automatic.

If newly completed mobile phone or internet applications are reason for registration, entries must be removed after 12 months at the latest. With the mobile phone tariff, data is archived for one year, but for the score, the information is only added for ten days. The 12-month period also applies to account openings.

No rule without exceptions – also for the Credit score

In general, Agency scores are recalculated after three months. During the year your credit rating may therefore change significantly. On these dates old data will be deleted and new data added. So much for the theory of entries. As always, there are some special rules. You are closing an account? You have settled open claims up to 1,000 GBP? In both cases you are entitled to immediate entry deletion. In the context of a so-called private insolvency, entries remain in force 36 months after the end of the six-year proceedings. This results in a total duration of nine years. The beginning of the period is the filing of the private insolvency.

These options for score optimization are available

Let us now turn to the opportunities for improving your individual rating by the credit agency from Wiesbaden. Or their “competitors”, who mostly work quite similarly. Here you will find our top 7 tips for improving your score.

1.  Refrain from changing banks and accounts too frequently

With regular special offers and switching bonuses in the banking sector, it is tempting to keep switching bank accounts and reducing spending. However, it is advisable to change accounts as rarely as possible and to apply for new bank accounts. In comparison under otherwise identical conditions, it is noticeable that scoring values of long-standing loyal bank customers are better than those of customers who constantly change accounts. In addition, it is not recommended to use too many bank accounts in parallel. This can also have negative effects.

2.  It is best to use only one credit card!

Just like loans, credit cards are an obstacle on the way to an optimal Credit score. If you absolutely need a credit card, you should leave it with a single one. Each additional card has an additional negative effect on your rating. Not to mention card usage fees. Replace expensive cards with a cheaper one rather than applying for a second card.

3.  Always pay bills on time

Exemplary payment behaviour is the be-all and end-all for a good to very good Agency score. This means in plain language: Whoever buys something in instalments or regularly receives invoices should always transfer amounts punctually or have them debited by direct debit. Direct debiting is the safest way. The prerequisite is, of course, that there are sufficient funds in the account to cover the debits. If this is not the case, this not only causes reminder and chargeback fees. At the latest if you do not comply with a payment request of your electricity supplier, landlord or other contractual partner for the second time, a negative Agency entry will be the result.

4.  Pay credit instalments always on time – also think of the disposition!

Direct debit is also the most reliable approach to avoid missed payments. For your own safety, do not set monthly instalments too high. If the repayment phase runs smoothly and as agreed, the basic score will rise very gradually. After a successful loan agreement, your score will first drop noticeably. Attention: You should also make use of the disposition in between and not continuously use it to full capacity. If you never pay anything back, the bank may cancel the overdraft facility. This in turn leaves a negative mark on your Agency score.

5. Do not make unnecessary and too many loan inquiries

For some consumers, it is tempting to make credit enquiries from time to time – so to speak, in order to sound out their own opportunities. But it is not useful if you do not actually need a loan. This is because banks usually make an Agency inquiry, which sooner or later has an influence on the scoring value. The higher the number of your inquiries, the more significant the impact on your basic score. Even non-binding enquiries to brokerage portals and platforms for the granting of loans “from private to private” can make themselves felt in your data overview. Exceptions can be so-called-neutral offers, which are advertised on the market in a few cases.

6. Reschedule several loans quickly

You pay instalments for several (small) loans? Perhaps you are using zero percent financing from online shops or retail chains. With regard to the Agency database, a single loan is always better than several monthly instalments for different loans. Especially since you can also save cash money by rescheduling debts.

7. Do you absolutely have to move?

Many people do not even know that the place of residence as well as the frequency of the change of residence can also have an effect on the Credit scoring. Time and again, the media criticise that credit agencies allegedly include the notes of people in the immediate vicinity and their scores in their calculations. Of course you have no influence on this. What you can influence, however, is the number of moves you make. The longer you live in one place, the better it is for your basic score. Agency appreciates “reliability” in this respect. Of course, changes of residence for professional reasons are not generally avoidable.

Our conclusion for the optimization of the Credit-Scorings

They must know that the measures presented do not allow for acute improvements. After three months, however, you can probably already see a first positive change. It is no less important to have incorrect entries deleted. If you are concerned about the correctness of your score, do not hesitate to contact Agency. And in any case use the right to the mentioned annual self-disclosure.