How to improve your credit score

How to improve your credit score

HOW TO IMPROVE YOUR CREDIT SCORE

Credit scores are a huge part of our financial lives and they can’t be ignored. Get going on your journey to financial stability by getting your credit score in good shape.

WHY DO I NEED TO IMPROVE MY CREDIT SCORE?

Hitting financial difficulty can be unsettling for anyone. If something unfortunate happens, you don’t want to have to rely on high-cost short-term credit. With an improved credit score, you could instead lean on more premium, cheaper products like 0% interest credit cards.

A better credit score could also mean you receive cheaper interest rates and lengthier loan terms. This means borrowing will be much cheaper and will help you achieve goals like big home improvements or a mortgage.

KEEP YOUR CASH - DON’T PAY FOR A BETTER CREDIT FILE

Everything you need to do to improve your credit file can be done by you, for free. You do not need to pay anyone to help you.

Getting your credit score into tip top shape is a long game. For sure there are some quick wins you can do (explained in this guide) but be wary about any false claims you may see online that promise great credit scores over night.

HOW LONG WILL IT TAKE TO REPAIR MY CREDIT SCORE?

There really is no definite answer to this as it all depends on your score and what’s currently affecting it. Taking a few extra, easy-to-follow steps like we’ve outlined in this guide, could mean your score could jump by 50-100 points in about three months.

However, file imprints such as CCJs and IVAs will stick around for six years but will have less of a negative effect on your credit score as time goes on. The key is to focus on your long term goal and be patient.

Use our budget planner to keep on top of your repayments each month.

MY REPAYMENT HISTORY IS ALL GOOD. NOW WHAT?

Your credit score isn’t just about making payments on time or paying in full. It’s also about how you use your credit.

If you have a credit card limit of £250 and spend it all in one hit, your credit score could take a blow. Instead use your credit card little and often to show creditors you can manage your money.

If your lender offers you a larger credit limit, take the offer ONLY if you know you can stay on top of your spending. Don’t use your full limit and if you can, pay more than your minimum repayment each month.

Credit builder credit cards can be a great place to start if you want to focus on rebuilding your credit score.

DON’T GET DECLINED FOR INCONSISTENCY

When you apply for credit, lenders will make two different checks; one on your credit file and one with two anti–fraud agencies, CIFAS and National Hunter. They do this to make sure your application isn’t fraudulent. If you’re inconsistent between application forms, you can hurt your credit score.

If you have two different job titles or contact numbers, make sure you use the same one for each application. You also need to make sure you’ve updated all your credit accounts with the right address so they all show the same details.

PRACTICAL TIPS

Understanding the concept of your credit file and how it can be affected is a great starting point. The next step is to start taking action to boost your credit rating.

We’ve put together 12 different steps you can take to improve your credit score in this guide and have given you a few tips below:

LIMIT YOUR APPLICATIONS

If you’re looking for credit, don’t apply for loads all at once. This can harm your credit score because it makes lenders think you’re desperate for credit. Try using tools, like our eligibility checker, to get a good idea of who will accept you before you apply.

DON’T WITHDRAW CASH ON CREDIT CARDS

Withdrawing cash with a credit card is not only very expensive but can be an indication to lenders that you’re not great at managing money.

There is a misconception that lenders can see you’ve checked your credit file and may decline you because of it. This is a total myth so check your credit file regularly (at least once a year, ideally once a month or before every application).

REDUCE YOUR DEBTS

Having multiple credit accounts open all at once can have a negative effect on your application. If you’ve got old store cards, credit cards or overdrafts make sure you pay these off. Read our guide to find out more about reducing your debts.

DON’T MISS ANY PAYMENTS

Missing credit repayments is a big no no. If you’re worried you won’t be able to make a repayment on time, more debt is not the answer and you should seek help from the Money Advice Service or find out about your options in our guide.

FINAL WORD

It might feel overwhelming trying to understand your credit score but the bottom line is; use credit and use it well. Make repayments on time, keep your details updated and don’t use your full limit on credit cards. Follow these guidelines and you will see an improvement in your score.

USE OUR BUDGET PLANNER

Get started on your Take Control journey.