Can watching movies improve your credit score? Actually, something as simple as using your credit card to make regular payments can help build your payment story. More than 27 million UK households now subscribe to at least one streaming service – and all of them could take advantage of that to improve their credit scores. Here’s how.
How to make payments that improve your credit score
According to independent loan company Norton Finance, “Making a small regular monthly payment on a credit card and paying it off in full routinely keeps the account active and helps you build good credit habits. Over time, this shrewd yet simple habit can strengthen your credit score.”
And there’s no easier way to do this than using your card to make your monthly Netflix payments. No Netflix? Disney+ or Spotify payments would also work.
The key to making this work is to add your credit card to your account as the default payment method. As the subscription fee is charged to your card every month, this will provide you with a simple proof of on-time payment that will help improve your credit score.
Keep in mind that bounced payments will have the opposite effect, so keep an eye on your bank account or credit card so that never happens.
What else can you do to improve your credit score?
If your credit score could use more help, there are other things you can do to improve your financial health.
Take a closer look at your payment history
According to Investopedia, payment history is the single most important factor in your credit score rating. This means debts and bills that are paid on time play greatly in your favour. Missed payments or defaulting on your financial obligations does exactly the opposite.
If you have trouble keeping up with your monthly payments, automate as many of them as possible. Or set up due-date alerts so you know in advance a bill needs to be paid.
Keep your credit utilisation ratio low
Your credit utilisation ratio is how much of your current available credit you’re using. The ideal percentage is 30%. For example, if you have a credit with a limit of £10,000, ideally, you should never use more than £3,000 to it. If your current balance is a lot higher than 30% of your available credit, look into debt repayment as a way to improve your credit score.
Catch up if you’re behind with your payments
Late payments remain on your credit report for years. For payments that are already there, there isn’t much you can do. But paying off those debts will prevent new late payments from being added, especially in the case of ongoing accounts or subscriptions.
Don’t request more credit if you don’t need it
Applying for a new loan or a raise in your credit card limit can negatively affect your credit score. This is especially true if you make many applications within a short period of time. Take a break from credit applications if you’re trying to improve your credit score fast.
Was this article helpful?
YesNo
About the author
Diana is a writer specialising in debt repayment, savings, and personal investments. Her work has also appeared on MSN Money, Inc. Magazine, and Yahoo! Finance.
Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.
This post was originally published on Motley Fool
