Logbook loans have become an attractive option in the UK with over 90,000 loans approved every year. One of the key reasons for this popularity is because the lender does not factor applicants’ credit score. Indeed, most of the applicants are people whose applications for loans in banks have been declined. However, the poor credit score does not just make it difficult to get a bank loan; you will also find it a big challenge to get a mortgage, insurance cover, and other financial services. Therefore, the most important thing after getting a logbook loan is working on the credit score. Here are special tips on how to increase your credit score.
Check and correct your credit score with credit agencies
Many financial institutions will check your credit report and dismiss the loan application immediately if the score is low. However, many are the times when the scores provided by credit agencies are incorrect. Because agencies are third parties, the information they gather from banks, mortgage companies, and insurance firms among other institutions is not always right.
Because banks and other companies are for-profit institutions, it is not uncommon to find clients credit info being submitted when it is very late. In other cases, the information may have incorrect figures or fail to reach the credit reference agencies altogether. Therefore, the first thing towards correcting your credit report is getting your report from three different agencies and correcting the details.
Strictly follow the agreed logbook repayment plan
One of the main factors that pull down credit score is outstanding debts. Now that you have added another debt, the burden has become bigger. You must, therefore, follow the agreed repayment plan faithfully because defaulting has huge implications. Unlike other types of loans such as unsecured bank credit that only accrues more interest; the logbook loan company will come for your car if you default. In fact, this is not all. The V5 loan company will even sue you if the car is sold and recovered cash does not clear the loan.
Review all your loans and clear them progressively
Your credit score will not improve if you fail to clear all outstanding debts. Though many people argue that getting out of debt is not easy, it is possible. One of the most recommended methods for addressing your debts is the Snowball Strategy. In this method, you work out the least amount that should be paid on every debt and then commit extra resources to clearing the debt with the lowest amount. Immediately the debt with the lowest balance is cleared, the same procedure is followed until all the debts are cleared. The motivation that comes with seeing debt after another being cleared will be enough to help you get out of debt completely.
Consider borrowing from your account
To build on your credit score, consider borrowing from your account. Though banks might be unwilling to loan you, they will be ready to enter into an arrangement to allow you borrow from a personal account. Then, you can repay the amount progressively to build a positive history with credit agencies. Note that efforts for building good credit score must be consistent especially on taking loans and repaying them promptly.