Your credit score is important. Really important. It plays a part in determining the rate you get when you apply for a loan, mortgage, credit card – or any kind of finance really. That’s why it’s essential you look after it, any way you can. So, how do you improve your credit score? To get you started, we’ve picked out five of the easiest ways you can give it a boost.
1. Register to vote
Yep, it’s as simple as that. Registering on the electoral roll will provide you with a proof of address, making you appear far more credible to lenders. If you’re over the age of 16 (or 14 in Scotland), you can do this even if you live at home with your parents or if you’re student.
Want to get this ticked off the list? Register to vote online here.
2. Check your credit report
Errors on your credit file can be very problematic. Why? Well, because they not only affect the rate you’re offered, but could prevent you from receiving any offers at all. Common errors to look out for include:
- Credit cards and accounts showing as active when they’ve been closed
- Incorrect address histories
- Financial links to a partner that you’re no longer with
There are three main credit reference agencies that can provide you with your credit report: Equifax, Experian and TransUnion. It’s possible that their reports may be different, so it can be worth checking each one at least once. Look out for any errors and, if you spot one, contact the credit reference agency as soon as you can to get it updated.
3. Build up a credit history
Having never borrowed finance before is a good thing, right? Well no, not always. Unfortunately, having no credit history at all can be just as restrictive as having a poor one.
So, how can you build (or rebuild) your credit history? Well, one option is to apply for a credit builder card. These are credit cards available to people with little or no credit history. If you use your card little and often and pay it off in full every month, this can be a good way of improving your credit score. Watch out though – interest rates can be high, so try to avoid spending more on it than you can afford to pay back.
4. Keep your credit utilisation low
If you’ve already got a credit card, the key to a good credit score is to use it little and often, then pay it off in full every month. What’s really important though, is that you keep your credit utilisation to under 30% (meaning you only use 30% of your credit limit).
So, for example, if your credit limit was £3,000, to keep your credit utilisation low you’d need to avoid spending more than £900 on credit each month. Over time, sticking with this spending habit should help improve your credit score.
5. Avoid multiple credit applications
Making lots of credit applications in a short space of time can be a red flag for lenders. This is because it can suggest anything from fraudulent activity on your account to applying for more credit than you can afford. If you do get rejected for a loan or credit, don’t apply again immediately as it can reduce your score.