Find out how to improve credit rating and credit score with our top ten tips
Whether you’re looking for a credit card, a loan, a mortgage or even a new mobile phone contract, your credit rating and credit score play an important part in whether or not you get accepted for credit and therefore, the deal you want.
Don’t panic if your credit score isn’t perfect – our top tips could help you to improve your credit score and make your credit report look more appealing to potential lenders.
How to improve your credit rating
Step-by-step on how to improve your credit score
- Check your credit report and amend any details that aren’t correct.
- Get on the electoral roll and close any outstanding accounts you no longer use
- Pay your bills on time and consolidate any outstanding debts
- Don’t apply for too much credit in a short space of time and keep your eye on your credit file
1. Check your credit report
Lenders look at your credit report when you apply for a loan, credit card, mortgage or any other type of credit account to see what you already owe, how well you are keeping up with your repayments and whether you can afford to borrow more.
Checking your credit report can help you to improve your credit score because you can check how accurate it is and that it reflects your circumstances.
2. Make sure you’re on the electoral roll
If you haven’t done so already, register to vote at your current address – lenders use the electoral roll to check that you live where you say you live, so it can help to improve your credit report.
If you aren’t registered or are listed at another address, the lender may ask for further proof of your identity and address, or could even turn your application down.
3. Pay on time
Paying your bills on time and in full can help to improve your credit score. If you miss payments or don’t make them on time, as well as incurring penalties, a note will stay on your credit report for at least three years – which could give a bad impression to lenders.
4. Close any credit accounts you don’t use
It can help to improve your credit score if you close any credit accounts you don’t use. When looking at your credit report, lenders take into consideration the amount you could borrow, not just what you actually owe.
As a rule, it’s better to have a few well-managed accounts, than a lot of accounts which you don’t use.
5. Think about consolidating your debts
Consider consolidating your debts – identify which of your credit accounts are most expensive and see if you could consolidate them into a one, lower-cost loan. This could help to improve your credit score, as well as making your debts more affordable.
6. Don’t apply for lots of credit accounts in a short space of time
Each time you apply for credit and a lender looks at your credit report, a record of their check called a ‘footprint’ is made. If other lenders see a lot of footprints on your account in a short space of time it may hurt your chances of getting credit.
Keep the number of footprints on your credit report down and it could help to improve your credit score.
7. Build a credit history
Many people struggle to get the credit they want, not because they have a bad credit history, but because there isn’t enough information on their credit report for lenders to go on.
Lenders want to see evidence that you’re a responsible borrower and if you haven’t taken out many credit accounts before, this history won’t be there.
Apply for credit products that are open to people with less than perfect credit – these may not have the best rates, but they can help you improve your credit score, which will help you to get the credit you want in the future.
8. Be careful of credit repair companies
Exercise caution when it comes to credit repair companies claiming they can improve your credit score.
Credit repair companies claiming that they can remove or change the data on your credit report often charge hefty fees and may not be able to deliver on their promises.
9. Set the record straight
Check your credit report regularly to make sure that all the information it contains is correct. If you notice any errors, you can contact the relevant lender and ask for them to be corrected – you will be expected to provide proof that a mistake has been made.
If you have a good reason for any credit problems, for example if you were ill and couldn’t make your payments on time as a result, you can add something called a Notice of Correction to your account.
Potential lenders will be able to see this explanation – again, be prepared to provide proof.
10. Protect your identity
Check your credit report regularly for unfamiliar or suspicious entries, like a new account you didn’t open, an increase in the amount you owe which you can’t explain or new applications for credit you didn’t make – these could all be signs that you’ve been a victim of identity fraud.