A Christmas Carol of Credit

Do the ghosts of credit mistakes past make you feel like a financial scrooge at this time of year? That’s okay, you’re not the only one. It can be frustrating when the decisions we’ve made previously have an effect on our present and future.

In this blog, we’re talking about financial history, how it can impact your present (bah humbug!), and what you can do today to lessen the impact on your future.

Ghosts of credit past: understanding the impact of your financial history

Whether you’ve gone overboard on your holiday spending or you’ve missed a credit repayment, the choices we’ve made in previous years can come back to haunt us. Every financial decision you’ve made when it comes to borrowing money — good or bad — ends up on your credit report for up to six years. These are the decisions which lenders see and use to gauge your creditworthiness.

Find out what lenders see on your credit report in this blog.

When it comes to credit, it’s true that old habits and mistakes can come back to haunt you, but understanding where you went wrong is the first step. The good news is that credit reports and scores can evolve.

Just as Scrooge had to confront his past to move forward, reviewing your credit report can help you understand what’s holding you back. Take note of old, unresolved issues like unpaid debts, high interest rates, and any incorrect entries that may need disputing. By acknowledging and addressing these items, you can begin to rebuild and improve your creditworthiness.

Ghosts of credit present: navigating your financial choices today

It’s important to remember you can move forward to good credit in the future if you’re careful and start to make solid choices today. Your present-day financial choices — especially during the holiday season — could impact your credit score in the coming months if you’re not careful. 

Don’t be too hard on yourself though, holiday spending can be hard to resist especially when we’re bombarded with festive marketing. High credit utilisation (how much of your credit limit you use) can lower your credit score. For example, if your credit card limit is £1,000, try not to use more than £300 at any one time.

This shows lenders that you’re not over-relying on credit, which could help give your score a little boost.

If there’s one gift you can give your credit score, it’s making on-time payments. Setting reminders or automating payments can ensure you don’t miss due dates, keeping your credit history strong.

Ghosts of credit yet to come: preparing for your financial future

The unknown future can be changed for the better or worse depending on the steps you take today. While this might seem daunting, it’s also empowering because you have the ability to shape your financial future and avoid the mistakes of the past.

Start by setting realistic financial goals for the coming year. Are you aiming to clear existing debt, build savings, or raise your credit score to secure better loan terms? It’s about committing to a healthier, more sustainable approach. Working toward these goals not only helps your financial wellbeing but also positively impacts your creditworthiness.

Tips for Staying on Track

Set a budget: Outline your spending and saving goals to keep holiday shopping in check.

Monitor your credit report: Regularly reviewing your credit report can help you catch errors early, dispute incorrect entries, and track your progress.

Develop responsible credit habits: Pay bills on time, keep balances low, and avoid unnecessary credit inquiries.

Consider a credit-building tool: A Loqbox membership can help you improve your credit score by building a positive payment history in a structured way, setting you up for better terms and financial opportunities in the future. You can learn more about how we can help you here. 

Improvements to your credit score are not guaranteed.

Just like Scrooge, by learning from the credit mistakes of the past, making better choices in the present, and preparing for a financially stable future, you’re setting yourself up for a life of greater financial freedom.