How to improve your credit score

Credit scoring is one of the more complicated factors within finance but there are a few simple ways you can improve your score.

Do not spend excessively on a credit card:

  • Spend on small amounts, keeping your credit use low, preferably at or below half of your credit limit.

Check your report regularly for errors:

  • Any error in your report could affect your score and therefore your eligibility for any borrowing.
  • Contact the score provider to fix the problem.

Be sparing with credit applications:

  • Make sure you do not apply for credit multiple times in a short space of time, as this will increase the number of ‘hard searches’ noted against your credit report.
  • An abundance of hard searches noted on your credit report could negatively affect your score

Register for the electoral roll:

  • This allows lenders to verify your identity and increases your chance of a successful application.

Check before you apply:

  • There are multiple eligibility checkers out there on the internet, allowing you to soft search your own credit and see whether you are likely to pass an application for a credit product or not. This avoids rejection and the possibility of damaging your credit score.
  • SearchMyCredit only shows you offers that you are likely to be successful in applying for with your credit score, minimising the risk of rejection.

Pay bills in full and on time:

  • If you cannot pay your bills on time and in full this shows lenders that you are unable to manage your finances and credit efficiently.
  • If you struggle to remember when each bill needs to be paid set up a direct debit and the money will be withdrawn automatically. Just make sure there is enough money in your account to pay the direct debit!

Check your finances regularly to identify any potential fraud:

  • If you see a credit transaction that you do not recognise, you must report it to your bank immediately. Most fraudulent credit actions have the potential to damage your credit report and score.

Be aware of your overall credit status:

  • There are three Credit Reference Agencies (CRA) in the United Kingdom, each providing a slightly different view of your credit report, including a different credit score with each one. These three CRA’s are Callcredit, Experian, and Equifax. Make sure you have checked all three to gain a full understanding of your overall credit status.