A good credit score has many benefits, including easier access to finance and deals with lower interest rates.
We reveal some of the quickest ways to start to improve your score in less than 24 hours. Bear in mind, it can take around three months to see an improvement in your credit score. However, you can start making changes today. The sooner you start, the quicker your credit score will improve. Then you’ll start to reap the rewards and enjoy the benefits.
Just follow our simple plan to find out more:
9am - Add your name to bills
One easy way to boost your credit score is to get your name added to some household bills. If you maintain your repayments on time, every time, it'll look good on your credit report. This will help to build your credit history over time.
You don’t have to be on every single bill. But if your name isn’t on any, it’ll be difficult for lenders to tell if you are paying on time. All you need to do is contact your creditors to update your records. You can do this over the phone, or some companies allow you to do it online.
Once your name is on there, your creditor will start reporting your payments to the credit reference agencies. So this will work in your favour if you always pay on time. However, missed payments will reduce your credit score.
Be aware though, that adding your name to bills will link you to others that are also named on the account. If they have a bad credit history, it could affect your own ability to get finance in the future. Lenders may see you as a higher risk.
11am - Set up direct debits
As you know, paying all of your bills on time, every time will help you to increase your credit score. It will also show lenders that you’re reliable. This should help you when it comes to getting your credit application accepted.
Missing a single payment, on the other hand, can knock around 130 points off your credit score. Three to six missed payments can even lead to a default which will stay on your credit file for six years. This could reduce your ability to get approved for finance in the future.
So the best thing to do is to set up direct debits for all of your regular bills. Then you won't run the risk of forgetting to make a payment on time. As well as improving your credit score, it’ll show lenders that you're in control of your finances.
It’s quick and easy to do. Just get in touch with your creditors to give them your permission to collect money from your bank account each month. You can usually do this online or over the phone.
Tip: Make sure you set up a direct debit for at least the minimum amount on your credit cards. This will prevent any late fees or negative markers on your credit report. Plus, paying more than the minimum will help you to pay off your debt sooner.
1pm - Join the Rental Exchange Initiative
Rental payments don’t automatically show up on your credit report or contribute to your credit score. So the Rental Exchange Initiative has been set up to try to even out the playing field between renters and homeowners.
When you sign up to this scheme, your rental payments will begin to show on your credit report going forwards. This means you’ll get rewarded for paying your rent on time, every time. It’ll help you to build up a good credit history, boost your credit score and increase your attractiveness to lenders, so you may find it easier to get finance approved in the future. Just remember, any missed payments will have a negative impact.
To get it set up, you can either: 1. Ask your landlord to report your payments to the Rental Exchange Initiative 2. Report the data yourself through CreditLadder or Canopy
You’ll need to provide: • Some personal information • Tenancy details • Online banking details
Your chances of getting finance should also be boosted by doing this. Lenders usually check the electoral roll to confirm your identity and your address when you apply for credit.
If you’re not eligible to vote in the UK, you could update your address with the three main credit reference agencies (Experian, Equifax and TransUnion) instead. You’ll need to send them proof of your address so they can add a note on your credit report to reassure lenders. Remember, it can take at least a month to have an impact on your credit score.
If you’ve managed to put some savings aside, consider using some (or all) of them towards paying off your debts. Reducing your debt-to-income ratio should boost your credit score and could also save you money on interest.
Lenders want to know you can afford to borrow more money on top of your current outgoings. So the lower your debts are, the less risky you’ll appear to them. At the end of the day, they want to get their money back in full. Read on to find out what is the optimal amount to have on a credit card to boost your credit score.
What to do with savings is a personal decision though. You might prefer to keep some back for a rainy day or in case of an emergency.