Your credit score is an at-a-glance figure that showcases your history of repaying debt. The number isn't set in stone and you can change it over time.
As your score evolves and shifts with your credit behaviour, there are a few things you can do instantly that will push it in the right direction. We’ve pulled together 10 simple steps you can take to bolster your score. Note - although these are actions you can do today, it may take a few weeks for the effect to take hold on your report.
1 - Register on the electoral roll
Your credit report is there to show two things: your credit history and proof you are who you say you are.
Registering on the electoral roll confirms your identity and it’s really easy to do. You can sign up for the electoral roll here. It only takes about five minutes and it can increase your score by around 50 points.
2 - Set up direct debits for all your payments
Missed payments are one of the easiest ways to harm your credit score. Even a single missed or late payment can damage it and it stays on your record for six years (although its impact will lessen with time). Also, the more serious of credit mistakes, like defaults and CCJs, start off as missed payments. A default is normally applied after three to six missed payments, with a CCJ following if an agreement can’t be reached after that.
Anyone can forget when a bill is due, so if you set up direct debits for all your payments you’ll never miss one (assuming you have enough money in your account to cover it). If you can’t do this, set up reminders on your phone or calendar to make sure you never forget to pay a bill.
3 - Check your score
Knowledge is power. So the best way to improve your credit score is to start understanding what it means, and the best way to do this is to regularly check it.
You can now check your credit score for free with all three of the main credit reference agencies (Equifax, Experian and Transunion), and many services also help you improve it. Our partner CredAbility explain the factors that affect your score, helping you set realistic goals and get coaching along the way.
4 - Correct any mistakes
Now you’ve checked your score, have you noticed anything amiss? Is there an incorrect address on your account? Or a missed payment you know you made on time?
Mistakes can happen easily, but if they’re on your credit report it could mean a negative impact on your score. If you spot anything you don’t think is right, contact the lender and credit agency in question. If the lender agrees, they’ll make the changes, which will reverse any damage it’s caused.
5 - Remove previous financial partners
Have you ever had a credit agreement with anyone else? Anything from a shared mortgage to a joint bank account will show up as a financial association, and if you spot this on your report and it’s no longer the case, get it corrected. Just make sure the joint account is closed first, or the credit reference agency won’t be able to make the amendments.
If the person you have an association with has a negative credit history, this will link to your report. It won’t affect your score directly but it can reduce the likelihood of you being accepted when you apply for finance, as they will view both of your histories. Even if their credit history isn’t bad, it’s not a good idea to keep it on your report, in case their circumstances or behaviour changes.
6 - Register on the Rental Exchange initiative
If you lease your property, paying your rent on time is a good demonstration of your suitability to lend money to. Sadly for many years, tenants weren’t able to record their rental payments on their credit history, but now you can get this added to your credit report.
7 - Clear your debt with your savings
Have you got any money set aside? While it’s tempting to keep savings for a rainy day, alleviating your debt situation can boost your credit score as well as save you money.
Unless you’ve benefited from introductory offers on your debts, the chances are it costs you more to have them than what you earn in your savings. This is because the interest on savings accounts or ISAs is rarely higher than the interest charged on debts such as loans or credit cards.
Reducing debt will also help to improve your credit utilisation ratio, which is the amount of money you’ve borrowed out of the total available to you. Keeping it to under 30% boosts your score.
8 - Pay for your car insurance monthly
Paying for your car insurance monthly is a form of credit, so if you switch to paying by instalments, it can help boost your score (assuming you pay on time, every time). This will boost your score with Experian by 20 points.
Bear in mind though it’s usually cheaper to pay in one go, so you will need to weigh up any costs of doing so against the benefit to your credit score.
9 - Put your name on household bills
It’s not just your car insurance. There are other household bills such as gas, electricity and even mobile phone contracts that when paid monthly are classed as a form of credit.
Paying for them will improve your credit history, as long as you stay on time with all your payments. If you are in a shared house it’s a good idea to put your name on some bills at the very least, although be aware this will count as a financial association. As we explained earlier this can potentially reduce your chance of being accepted on future credit applications.
10 - Organise your credit and finances better
If you give your finances a basic spring cleaning, it should help you to make decisions about improving your score.
Can you increase your direct debits for your existing debts within your current budget? Or make any cuts on your monthly spending and allocate the saved money to paying off your debt? Both or either of these will improve your credit utilisation.
Also, plan when you next need credit. The longer you go without applying, the better your score will be as your credit report records all hard searches within the past 12 months from lenders. Lenders can perceive multiple applications as a sign you’re struggling with your finances, so hold back on them if you can.
Looking for more ways to improve your credit score? Check out these 45 credit score improving facts in our ultimate guide.
Disclaimer: All information and links are correct at the time of publishing.
By Jimmy Coultas
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