Having a poor credit score can impact all areas of your financial life. Mortgages, credit cards and mobile phone contracts are all dictated by whether or not you have a ‘good’ credit score. So if yours is less than squeaky clean, what can you do to improve it? And how long will it take before its back in tip top shape?
How can I improve my credit score?
If you need to improve your credit score, there are several things you can do. Some will make a difference almost straight away, while others may take years for the improvement to be seen.
Build your credit history – In order to improve your score, you most likely need to build a positive credit history. Be this through a credit rebuilder credit card or a mobile phone contract, try to make sure you are responsible with your borrowing and make every monthly payment. This can go a long way to seeing your score improve.
Check your report for mistakes – There may be errors on your report that are impacting your overall score. You should be able to view your credit report at all three credit reference agencies for free. If there are any mistakes on your report, and you are able to successfully dispute them, this can this can make a difference almost immediately.
Register for the electoral roll – Registering on the electoral roll is an easy fix. Lenders want to check that you are who you say you are, and you live where you say you live. The way they do this is to check the information you have provided against what is on the electoral roll. Making sure they can quickly and easily verify that you’re telling the truth can help your credit score.
Consider your credit utilisation – How much credit is available to you is important when it comes to your credit score. Your credit utilisation is how much of your available balance you have spent. It’s a good idea to check the amount of credit you are using. The general advice is to try to keep this at 25% or less at any one time.
Other quick wins – Other options to improve your score include paying down existing credit card debt or closing unused credit card accounts. How quickly these actions show on your report depends on how quickly the credit reference agency receives the information from the lender.
How long does it take to improve my score?
Unfortunately there is no definite answer to this question. How long it will take varies from person to person and the factors that are impacting their score. For some it could be a matter of a few months, while for others it may take several years.
For example, if your credit score is suffering from little or no credit history, then that is not something you can create overnight. While you can open new credit accounts almost immediately, it could take years of good financial management to build a credit history.
Similarly, if you have negative marks on your report, such as missing payments or exceeding your credit limit, these usually stay on there for six years.
Another element that may impact how quickly you start to see your score change is how fast lenders and other organisations are in reporting your account activity. For example, registering on the electoral roll is a good way to improve your credit score, but it could take weeks for this to appear on your credit report.
Some offers on MyWalletHero 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.