How to improve your credit score

Want to know how you can make sure your credit score is going in the right direction? Here are our 9 top tips to get you on the right track.

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Improving your credit score is important because lenders use it when they’re assessing whether to lend to you. That means a poor credit score often leads to problems applying for credit and lenders charging higher interest rates.

In this guide, we take a look at how to improve your credit score. We also investigate how long it takes to boost your credit score and the benefits of improving it.

9 ways to improve your credit score

Thankfully, there are many ways you can improve your credit score.

1. Register for the electoral roll

You may be wondering what registering to vote has to do with your credit score. Well, it’s one of the key things to do if you want to improve your credit score.

Registering on the government’s electoral roll (sometimes called the electoral register) can improve your credit score because it provides proof of your home address and your identity. Lenders want to know that you are who you say you are and that you live where you say you live.

2. Build your credit history

If you haven’t taken out loans or credit cards before, then you won’t have a credit history. This means lenders can’t tell whether you are likely to stick to a repayment schedule and repay the money they lend you.

You can build your credit history by taking out a credit card and paying off the balance in full every month. If you are denied a credit card, then you can apply for a credit builder card, which is designed for people with a poor credit history.

3. Make regular payments

Lenders are looking for responsible borrowing behaviour, so this is often the single most important factor in improving your credit score.

Missed payments for loans, credit cards, utility bills or even mobile phone bills will all impact your credit score.

If you have existing credit cards or loans, make regular payments on time to improve your credit score. Lenders will see you are a reliable borrower who is unlikely to default on a loan.

4. Check your credit report for mistakes

How many of us have actually seen our credit reports? Before you can go about improving your score, you need to know what information the credit reference agencies hold about you.

Credit report companies like Experian will often let you download your credit report for free. You can then check it for any mistakes. Even small mistakes like a typo in your address details can affect your credit score.

If you do spot a mistake, contact the credit reference agency to ask them to correct it. They have 30 days to correct the mistake or inform you why they don’t agree. During the 30 days, the item will be marked as “disputed” and lenders won’t be able to use it as part of their credit assessment.

It is also possible to add a note to your credit report called a Notice of Correction. This can explain any problems on your credit report, for example, a period of non-payment due to a job loss.

5. Keep your credit utilisation low

Credit utilisation is the portion of your credit limit that you are currently using. For example, if your credit card has a limit of £3,000 and you currently owe £1,500, then your credit utilisation on that card is 50%. If your credit utilisation rate is above 50% it may lead to an amber flag on your report. To improve your credit score, try to keep your credit utilisation below 30%.

6. Keep checking your credit report for potential fraud

Sometimes, criminals take out loans or credit cards in other people’s names. Check your credit report regularly to make sure this isn’t the case. If you’re about to apply for a mortgage or personal loan, then it makes sense to check your credit report again just to make sure there are no nasty surprises.

If you spot a problem, then contact the credit reference agency. There is more detailed information about what to do if you’re a victim of fraud on the CIFA website.

7. Keep old accounts open to prove a long credit history

If you want to improve your credit score, then it is a good idea to keep old accounts open. Using an established bank account rather than moving from bank to bank too often means you can provide a longer credit history and prove you are a reliable borrower.

8. Get a credit builder card

Credit builder cards are designed for people with poor credit ratings. They usually have low credit limits and high interest rates, so it’s important to repay your balance every month. Using this type of card will help you slowly build up a credit history and boost your credit score.

To find a credit builder card to start improving your credit score, check out our list of top-rated credit cards for bad credit in the UK.

9. Use Experian’s Boost service

Experian allows you to link your current account to your Experian account. This can provide extra evidence of how you use your current account and pay your bills on time, and it may improve your credit score.

The time needed to boost your credit score

How long it takes to boost your credit score depends on the reason for your poor credit score.

If you have a poor credit score due to a lack of credit history, then it can take around six months to start building your credit score. If your bad credit score is due to previous problem debts and loan defaults, then it can take as much as a few years to rebuild your credit score.

A bankruptcy stays on your credit report for up to 10 years, so it will have a long-term impact on your credit score.

The benefits of improving your credit score

If you manage to improve your credit score, it could save you a lot of money in the long run. This is because lenders use your credit score to assess whether they will lend to you and what interest rate to charge.

Customers with a good credit rating will usually benefit from the following:

  • Lower interest rates – lenders often offer lower interest rates because customers with a good credit rating are less risky to lend to.
  • Better chance of being approved for a mortgage or other lending – this means you are more likely to be accepted for a 0% credit card.
  • Higher credit limits – you may be offered a higher credit limit if you have a good credit rating.

Improving your credit score takes time and patience, but the outcome is worth it. These steps will hopefully put you on the right track to building credit over time.