How to improve your credit score
Posted on January 2, 2022
You know you have one, but do you know how to improve it?
Your credit score impacts the amount of credit you can access and the rate of interest you qualify for. This can mean some people with a poor credit history are only able to access high-cost credit. It is always best to compare the total cost of any credit you are looking to take out before signing on the dotted line.
In the UK, there’s no uniform credit rating or score and contrary to popular belief there’s no blacklist of banned people. Of course, if you’ve got a poor credit history, or had problems, it can feel like you’re blacklisted. Each credit reference agency scores you differently and while many lenders consider your credit score (would you lend to someone with a history of not repaying?) it also means just because one lender has rejected you, it doesn’t automatically mean others will. After an application rejection, it is important to check your credit file for errors and see if there is any ways you can improve it before applying again. Our Financial Wellbeing Portal has a link to a trusted free credit reference agency.
Ways to improve your score
Register to vote
If you’re not on the electoral roll, it’s much harder to get accepted for credit. You don’t have to wait for the annual reminder or for the elections to roll around. Apply at any time on Gov.uk. You will be asked a series of questions checking your identity and the local council you need to register with. You will need your national insurance number to register. If you worry the council will sell on your personal information, you can opt-out of the open register which may be used for marketing.
Are you financially linked to someone with a poor history?
If you are financially linked to someone, that means their files can be considered as part of whether you are accepted for credit. Even just a joint bills account with flatmates can mean you are co-scored. If your partner/flatmate has a poor history or you worry they do, keep your finances separate. Make sure you are not still linked with previous addresses or living situations.
A very important factor in your credit score is your payment history. If you are late with payments, even if you make them up later, you will see a negative impact on your credit report. Ensure you make payments for utility bills, mobile phones and any loans on time will help improve your score.
Store vs Bank Cards
High-interest store cards and mail order credit are judged more harshly than bank credit cards. If you regularly shop in one place, a store card can come with added benefits. If you make sure it is paid off each month it shows potential lenders you can manage your money. Paying off and closing unused store cards or mail order credit can help improve your score.
Please check our Financial Wellbeing Portal for other advice and links that could improve your Credit Score. We report all our loans to credit reference agencies. A good repayment history with us can also help improve your credit score.