how to improve your credit score

When was the last time you checked your credit score? In fact, have you ever checked it? While credit scores aren’t something you need on a daily basis, it does pay to get into the habit of keeping tabs on what your score is. 

Here, we explain the importance of credit scores, the information they hold about you and what you can do to improve yours.  

what are credit scores used for?      

Your credit score doesn’t just affect any applications you make to borrow money (e.g. mortgages, loans and credit cards), it can also impact the interest rate you pay. And if you are looking to move from one rental property to another, your prospective landlord may look at your score as part of their initial checks. 

It’s easy to fall into the trap of thinking your credit rating is good because you’ve hardly had to borrow money over the years or you’ve not missed any mortgage payments. However, having a limited credit history (created by you not really borrowing much money and paying it back on time) can actually affect your credit score. All of the different lenders use different calculations to determine your credit score, despite the fact they tend to work with the same set of information. 

how can I check my credit score? 

There are three credit reference agencies in the UK - Equifax, Experian and TransUnion. They’re the organisations to reach out to for a copy of your credit report. 

It’s not uncommon for these agencies to base your report on different information from different lenders, making it all the more important for you to check your report at least once a year. And if you’re just about to make a big application (e.g. for a mortgage), check your report well in advance to prevent getting caught out by any nasty low credit rating surprises. (Note: your checks aren’t recorded on the report, so don’t worry about over-checking, it won’t affect your score). 

what’s in your credit report? 

Generally speaking, credit reports contain the following information:  

• personal details, including your name, date of birth, current and previous addresses and whether or not you're on the Electoral Register 
• details of your credit accounts, including credit cards, mortgages, loans and store cards, plus information on any late or missed payments 
• county Court Judgements (CCJs), house repossessions or bankruptcies that have happened to you over the last six years  
• details of people you're financially linked to (this could be someone you live with or share a bank account with) 
• your current account provider and other account details 

how to improve your credit score 

We’ve already mentioned the importance of checking what your credit score is on a regular basis. In fact, there are actually apps out there, such as Credit Karma, CreditWise and Credit Sesame, you can download and use to monitor your score. 

But if your result’s not as good as you’d like it to be, there are certain things you can do to help improve it. They include: 

• Registering to vote - in doing so, you’ll be added to the Electoral Register. If you’ve moved house, make sure you re-register. It’s easy to do via The Electoral Commission’s website. 
• Looking for out-of-date details - check that the information the credit reference agencies hold about you is the very latest version. If, for some reason, the credit reference agency refuses to correct a mistake within your file, you can add a notice of correction to your report or make an official complaint to the Financial Ombudsman. 
• Reducing your debts - wherever possible. Review all of your outgoing debts and see if it’s possible to streamline any of them or pay them off sooner, rather than later. If you have credit cards that you aren’t using, cancel them straightaway. 
• Avoiding making multiple credit applications in a short space of time - each application for credit is recorded on your file for 12 months. Too many applications in a short space of time can make you look desperate and result in your applications being rejected. This leaves a ‘black mark’ against your name. 
• Asking for a quote or soft search rather than a credit search - before making an application. It’ll provide you with a clearer good idea on the rate you’ll be offered and whether your application is likely to be approved.  
• Using consistent details when applying for credit - changes in the details you share can appear suspicious to lenders, who are then more inclined to reject your application. 
• Joining The Rental Exchange initiative - every time you pay your rent on time, your credit score gets boosted! Sign up here - experian.co.uk/rental-exchange 
• Always paying your bills on time - alternatively, if you are going to be late with your payment, contact the company first, so they are aware of your situation and will therefore be less likely to penalise you. 
• Distancing yourself from old partners - if you no longer have a relationship with someone you’re financially linked to, ask the credit reference agencies to remove their details from your credit report. 
• Avoiding payday loans - traditional money lenders often view them as a sign of poor money management.  

If you’re concerned about your credit history or it’s impacting your finances, we can help. Our specialist debt advisors are here to work with you to help you get your financial situation back on track. All of our services are free and strictly confidential. Get in touch with our team of friendly advisors today.