Your credit score is really important when it comes to being accepted for a personal loan, car loan, mobile phone contract or even getting the best prices for your utility bills. The best tariffs for utility bills tend to be those that are paid by direct debit - but you usually need a good credit score to be able to pay by direct debit in the first place! Whilst there aren't many quick fixes, there is plenty you can do to help improve your credit score and credit history..
Understanding your credit score.
Before you begin, it's important to remember that the big three credit bureaus in the UK can all provide you with a credit score and credit report.
The three main credit bureaus in the UK are Experian, Equifax and TransUnion. They use different scoring systems so a 600 score for Equifax would be classed as 'good' (Equifax score out of 1000). On the other hand, an Experian (they score out of 999) see 600 as 'Poor' and on TransUnion (the maximum score for them is 710) it is seen as 'Fair'!
How do I find out my credit score?
A number of companies provide access to your credit score and credit report for free - in return, they hope you can sign up to a credit card or personal loan (this means they'll earn some commission). They may also try to help you improve your score. Others may not look to sell you anything, but will charge a fee:
Credito - free trial.
ClearScore.com - free access.
Equifax - free trial for 30 days.
Experian - here.
Checkmyfile - free for 30 days.
Seven simple tips to get credit scores moving!
Register to vote
Arguably the easiest and one of the most important things you can do is ensure you are on the electoral roll and are listed at your current address. It's the first thing lenders check as they need an address to 'pin' all your information to. If you aren't on public records as being a resident at your address you may struggle to borrow and it's unlikely you can improve your credit history.
It's really easy to register and can all be done online here. If you’re not sure if you’re registered, you’ll need to check with your local authority which you can do here.
Make your repayments on time
Whether it's car insurance premiums or loan repayments, paying on time is a crucial way to boost your credit score because lenders like people who stick to the schedule, so to speak. It's why mortgage holders are given credit for paying their repayments on time every month, and it's something tenants can now do as well. Register with CreditLadder and start adding your rental payments to your credit file. CreditLadder is the only way to improve your credit score and position across all three major credit bureaus in the UK, namely Experian, Equifax and TransUnion.
Think about how you use credit cards
If you're lucky enough to qualify for a credit card account already, how you use one also impacts your credit score. Misuse of credit cards can leave you with a bad credit history.
Credit card utilisation
Simply put if you have a credit limit of £1,000 try to use about 30% of this, so about £300. This can help deliver a good credit score.
Keep your outstanding balance low or zero
By clearing your credit card balance each month, not only do you avoid paying interest, but you could also improve your credit score. Lenders look at your payment history and a good payment history can result in a higher credit score as well as a credit limit increase. A credit limit increase will therefore mean more available credit for you. Late payments should be avoided as any late payments or missed payments can impact your credit rating.
You may find it beneficial to apply to a second credit card company if you're using your first credit card well and to avoid going over your credit limit. Your positive payment history may well help you too.
A good tip is to set up any bank accounts you might have to automatically clear your credit card debt when it is due - automatic payments are very helpful in case you forget to pay!
Regularly check your credit reports
Mistakes can be made, so it's important to regularly check your credit reports to ensure everything is in order. If there is any negative information that shouldn't be on your credit report it can take a little while to get things corrected and you really don't want to be doing that when you're trying to take out credit. All the sites listed above that can show you your credit scores can also show you your credit reports - we've added them once more below. Some will offer a free credit report, others will charge but you may find paying for a service gives you more of what you need.
Credito - free trial.
ClearScore.com - free access.
Equifax - free trial for 30 days.
Experian - here.
Checkmyfile - free for 30 days.
You can also check who is linked to your credit file. Having someone linked to you through a joint account could affect your score if they have a poor rating. Do close any old joint accounts that you don’t use.
CreditLadder can help you improve your credit score
Tenants can improve their credit scores without having to borrow money. If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all three of the main Credit Reference Agencies in the UK, namely Experian, Equifax and TransUnion.
CreditLadder also runs a free mortgage application service that will tell you how much you could borrow.
Pay monthly if it doesn't cost you more
If you're given an option of paying bills monthly (such as insurance) then it can help your credit score if you make agreed monthly repayments. If however you're been charged additional interest to pay monthly it may be better to pay annually if you can afford to do so as the extra interest you pay each month is unlikely to be worth more than any credit score increase.
Put bills into your name
The is a benefit to having bills in your name - examples include a phone bill, utility bills and council tax.
Paying bills on time will help your credit and will show up on your credit report. It's really important to avoid late payments as this is likely to have a negative impact on your credit rating.
Summary
Overall, there are a number of things you can do to improve your credit score and create a good credit history.
Registering to vote is arguably one of the most important things you can do to help improve credit scores.
Sign up for services that show your credit reports are a great way to ensure nothing is appearing that might cause you a credit issue. Whether it's an Experian credit report, Equifax or TransUnion credit report, or ideally from all three of the major credit bureaus you can keep an eye on what's going on.
New services like Experian Boost might help - this is where regular payments for things like streaming services could improve your position with Experian.
If you have a credit card, ensure you keep an eye on those credit card balances and that you're using available credit but without exceeding your credit limits. When you pay off your balance, it's important to avoid any late payments.
It's never too late to improve your credit position and hopefully, this article has answered some of the credit questions you've had!
Remember, CreditLadder can help you improve your credit score.
CreditLadder can improve your credit position by reporting your rent payments. CreditLadder is the first way to improve your credit score and position across all three of the main Credit Reference Agencies in the UK, namely Experian, Equifax and TransUnion. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money. CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the content provided in this article is for information purposes only and should not be considered as advice.