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How can you improve your credit score?

Getting a mortgage, loan or credit card is much easier if you have a good credit score. Here, we explain how you can improve yours.

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How to improve your credit rating and credit score
Soft checks are useful because they don’t leave a trace on your credit file, so your credit score isn’t harmed when you run one. 

Having some form of credit is one of life’s necessities, and if you’re savvy, it can be a good thing. If you want to get the most from your chosen line of credit – credit cardloan or mortgage – you should first look to improve your credit score.

What is a credit score?

A credit score indicates how robust your financial history appears to lenders and other companies. The higher the credit score, the greater the chance of successfully applying for a relatively low-interest-rate loan or other credit product. 

Running a soft credit check can help you see your score and get an overview of your credit history. Companies also use these checks to determine whether you’re likely to be eligible for a product before applying. Soft checks are useful because they don’t leave a trace on your credit file, so your credit score isn’t harmed when you run one. 

By contrast, when you apply for a credit product, the provider runs more rigorous hard credit checks. These checks reveal more detail about your credit history and are recorded on your file, which can affect your credit score.

What financial products are affected by your credit score?

Your ability to get the best deals on credit products isn’t limited to just credit cards, loans and mortgages. Your credit score can also affect your success in getting good deals on any of the following:

How to check your credit score

You can check your credit score by getting your free statutory credit report or credit file from the three credit reference agencies –  Equifax, Experian and TransUnion

In addition, certain third-party providers, such as ClearScore and Credit Karma, offer soft searches of the credit reference agencies' reports. The credit reference agencies provide more comprehensive credit report services. These are often offered with a free 30-day trial, after which you pay a rolling month-on-month fee.

To get your free credit check, you’ll need to register and provide the following information:

  • Your full name

  • Any other names you’ve used or been known by over the past six years

  • Your current postal address

  • Any other addresses you’ve lived at in the last six years

  • Your date of birth

How are credit scores calculated? 

Each credit reference agency uses a different formula to determine its credit score. As such, it’s a good idea to periodically check what score each agency gives you. 

What you want is a score towards the top of their ranges, which are all different – Equifax’s is 1,000, Experian’s 999 and TransUnion’s 710. 

Your credit score is intended to reflect what different lenders think of your credit history. It works on the principle that someone with a track record of sound credit and debt management will be viewed favourably. This will be reflected in a high score from the three credit reference agencies.

Someone who’s never used credit or struggled with repayments will be viewed as a more risky option, resulting in a low credit score.

How to build a good credit score

Given most of us will need credit at some point, it makes sense to start building a decent score sooner rather than later. To do this, regularly check your credit report and consider the following:

1. Take out a credit card…

Your first credit card will probably attract a relatively high interest rate. For this reason, it makes sense to get one even before you feel you need it and use it to build your credit management credentials. 

2. And use it wisely

Shop around for the best credit card you can get, and be sure to use it. If you don’t, this lack of use will show up on your credit file. Financial providers want to see evidence that you’re spending on and managing your new credit card. So, get the weekly shop with it and clear what you owe at the end of each month.

3. Don’t fall behind with payments

Whatever you do, make sure you always make your repayments on time. Not doing so would suggest you aren’t good at juggling your day-to-day finances and make you a greater credit risk. This would affect your credit score. 

4. Get on the electoral register

Being on the electoral register is essential if you want to build your credit score. If you’re not on the register, you could find it hard to get any form of credit, from a loan to a mortgage. This is because the electoral roll is a bullet-proof resource for lenders wanting to be sure of a potential customer’s address. 

5. Don’t get a payday loan

People who can’t get credit elsewhere because they have high debts or a poor track record with credit often turn to payday loans, which have far higher interest rates than other types of loans. Mainstream lenders tend to view anyone who resorts to this type of credit as a greater risk. 

6. Don’t make too many applications

When you apply for credit, it leaves a mark on your credit file. If you apply too often over a short space of time, lenders may think you’re desperate and, consequently, a greater credit risk.

7. Report errors and fraud

Errors on your credit file are rare, but they can happen. If a CCJ is noted on your file that shouldn’t be there, report it to the credit reference agency – and check that the same mistake isn’t on the other two agencies’ credit reports. 

Likewise, if you spot references to a credit card or loan you’ve never taken out, report it to the agency, the relevant lender and Action Fraud.

Do you know your credit score?

There are three main and several smaller credit agencies, you can compare their services with Uswitch.