How to improve your credit score

Man using phone

You’ve checked your credit report and score, but now what do you do? Since your score impacts your ability to access credit, as well as the level of credit and interest rates offered to you, perhaps it’s time you gave your score a boost?

Unless you have a top of the range credit score there are likely to be a thing or two you can do to try and bump up your number with the aim of becoming more creditworthy. Depending on your current financial situation this may mean taking a few simple steps to show that you’re managing existing debt efficiently or rectifying irresponsible behaviours you’ve displayed in the past.

Let’s look at how you can raise your credit score and focus on credit score repair…

How to raise your credit score

A credit score is built upwards from foundations like a house. So, rather than starting with a perfect credit score that you have to maintain, to reach the higher realms of scoring you’ll need to show that you can manage borrowing well. If you’ve had little or no credit up to this point, it’s hard for lenders to predict what kind of borrower you can be. This means you’re likely to have a lower credit score and may find it harder to access credit. So, what can you do?

Manage your credit

Firstly, make sure you’re registered on the electoral roll at the right address. Next, paying household bills like your internet, phone and electricity bills consistently on time and making sure you are being named on those bills can help to show that you can manage your money. At first, you’re likely to be able to access lower level borrowing only and the interest rates offered to you on products like credit cards will probably be much higher than you’d like. However, you could choose to build your credit rating with the credit available to you. For example, using a credit card to pay for a few things each month and paying it off in full. This way you can prove your reliability to lenders and in turn, raise your score.

Pay down debt

If you’ve already got borrowing that you’re paying off, making a concerted effort to lower the amount you owe and always paying on time will demonstrate a responsible attitude to borrowing. In turn, this will hopefully indicate that you’re able to service additional lines of credit. Do watch out for early repayment fees though as these could mean that you pay more for paying off your debts quickly.

Erase errors, flag up fraud and separate spouses

Errors on your credit report could also be holding your score back, so be sure to flag these up and ask the credit reference agency to correct them. These could be things like applications you’ve not made or addresses that shouldn’t be connected with you. And, if your credit report is connected to another person such as a spouse, former spouse or family member through a shared account, you may want to take steps to separate yourself financially if they have a poor credit rating. In the case of ex spouses, you can make a request that you be unlinked financially.

Repairing your credit score

Been less than a Credit Angel so far? If your credit score has been damaged by poor debt management or borrowing, you’ll need to invest some time and effort into turning things around.

If you’ve already got high levels of debt, taking out more borrowing is unlikely to help your situation. You might be tempted to try and apply for payday loans but these types of borrowing are real red flags to other borrowers and could land you in a worse financial position if you don’t manage to pay them off on time. If you’re struggling, it’s best to seek free and impartial debt advice in order to bring your borrowing back under control promptly. Remember, those subject to County Court Judgements (CCJs) and other penalties will find their credit score will take a big hit.

Moving home a lot can sometimes be a warning flag to lenders, as they’ll want to know that you’re going to stay put and not default on your debts. If you want to improve your credit score you may want to bear this in mind before you plan any further moves. And, don’t forget to check you’re on the electoral register whenever you move too.

Have you struggled to remember to make payments on time in the past? It’s time to take full charge of managing your payments properly. Where possible, set up direct debits for your payments, ensuring that there’s enough money in your account to cover them on the due date. Set up reminders and take advantage of any free account features lenders offer such as reminder texts and balance warnings. You could also look at budgeting tools to help you manage your incomings and outgoings.

Having a damaged credit score can really impact your access to credit, but you may find you still have some options open to you. Signing up for a free 30-day credit report trial with Credit Angel will give you lots of pointers to improve your score in the future. We can also match you with financial products you’re more likely to be accepted for based on your current credit score, including credit building cards. These credit cards tend to have higher interest rates and lower credit limits than most, but could help you repair your credit rating if you use one to demonstrate better borrowing behaviours.