Ways to improve your credit score

Whether you're planning to take out a loan, apply for a credit card, or even rent a property, your credit score plays a significant role in determining your eligibility and the terms you'll be offered.  

Your credit score reflects your reliability in borrowing and repaying money. When you submit an application to borrow money, lenders will check your credit score. Then, they will decide to if they will accept your application. This score helps lenders evaluate the risk of giving you money and help them decide how much money they can give you. 

Ways to improve your credit score

Register On the Electoral Roll  

Being registered to vote at your current address helps lenders verify your identity. One easy step that can give your credit score a boost. 

Check your credit report accuracy 

Your payment record reveals if your accounts were fully paid or had any missed payments. Information about your payments may sometimes be inaccurate, so verify your credit report for its accuracy. If there are errors, reach out to the provider to rectify them. 

Stay On Top of Payments 

Making payments and bills on time demonstrates you are a reliable borrower. A missed payment could negatively affect your credit score. It’s advised to set up direct debits, so you don’t miss any payment.  

Establish a Credit History 

If you've never taken a loan before, there won't be any proof that you can repay the money on time. Borrowing a small amount of money can help you borrow larger amounts later– provided you handle it responsibly. Having an arranged overdraft or a credit builder card with a small limit could be a good way to build a credit score. 

Limit Credit Applications  

Applying for multiple credit cards over the years, and not using some of them, can negatively impact your credit score. It is advisable to close unused credit card accounts. 

Avoid using all available Credit 

Credit utilisation is the percentage of money you use from your total credit limits. Maintaining low balances relative to your limits, ideally under 30% utilisation, can positively impact your credit scores. If you have a total credit limit of £1,000 across all your credit cards, and your outstanding balances add up to £250, your credit utilisation ratio would be 25%. Since this is below the recommended 30% threshold, it demonstrates responsible credit usage which can help increase your credit score. 

Check for Errors on your report 

Carefully review your credit report for any inaccuracies, even minor ones like incorrect addresses, as they can impact your score and result in refusing your credit. Ensure all information is accurate and up-to-date. If you find mistakes, contact the provider directly and ask them to change it. You can also include a 'statement of clarification' that provides context for any missed payment. 

Be Mindful of Joint Accounts  

When applying for joint credit, like an overdraft, loan or mortgage, your credit histories become linked. If seeking to improve your score, it's wise to have your partner work on their credit score too, especially if it's poor. 

How long does it take to improve your credit score? 

Improving your credit score takes time. New accounts may take weeks to appear on your report, and a few months for them to positively impact your credit score.  

Making consistent, timely payments on your accounts will improve your score while building a credit history. However, missed payments and court judgments stay on your report for 6 years, though their impact reduces over time until they are removed.