Benefits of improving your credit score.

Improving your credit score or credit rating can help you in a number of ways:

• It can help you get approved for credit such as a loan, credit card, mobile phone contracts or mortgage.

• The rate of interest you'll be charged might be lower for example how much your credit card company charges.

• You're more likely to be offered higher credit limits on a credit card or loan.

  
  

How is your credit score calculated?

The 3 biggest credit reference agencies in the UK are - Experian, Equifax and TransUnion. All credit reference agencies operate a points based system when calculating your credit score, and this information is based on what appears on your credit reports. As mentioned a good credit score has a number of benefits.

Ways you can increase your credit score

Register to vote

The one must do if you want to improve your credit score is to get onto the electoral roll. All the credit reference agencies need to be able to confirm your address (also called pinning).

Your address details will need to be validated and if you're not on the electoral roll there is a good chance you'll be turned down. You can register here.

Make regular payments on time

If you're lucky enough to already get credit or borrow money then it's really important your payment history is up to date and you don't have any late or missed payments. On time payments will help improve your credit score and might also help increase the total credit limit given by a lender.

Prove your creditworthiness

If you haven’t yet borrowed money then getting new credit from a credit provider can be a challenge.

By agreeing a small overdraft with your bank and not exceeding your limit can help. So can applying for a credit builder credit card where you can look to use your card and pay your balance off in full.

Check for errors on your credit file and report any errors.

It's important to check your credit file for any mistakes. Accessing your credit report, whether it is your Equifax, TransUnion or Experian credit report is a great way to keep on top of your credit report. Services such as checkmyfile, Clearscore and Credit Karma can all help you access your credit report.

These services can also be used to check any fraudulent activity or even identity theft on your account or at your address - for example by a previous tenant. Both identity theft and fraudulent activity can cause issues when trying to access credit.

Report your rent payments.

CreditLadder is the UK's first and biggest rent reporting platform.

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 four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva.

CreditLadder also runs a free mortgage application service that will tell you how much you could borrow.

Pay bills on time.

Whether it's your council tax payments, credit card balances or utility payments it's important to make on time payments and avoid any missed payments or late payments. All of these can improve your credit score.

A missed payment or making only a minimum payment could impact your credit score. Making only the minimum payment on a credit card account will also mean you end up paying more interest which is not good for your financial health.

How quickly can you improve your credit score?

The short answer is that this varies - some changes can be take a few weeks, and others can take a few months. The important thing is to ensure you're doing all that you can to improve your credit score.

Ways your credit scores can fall.

Whilst there are a number of ways in which you can improve your credit score, it's important to know certain behaviours can have a negative impact and lead to a poorer credit score.

Things that can have a negative impact on credit scores include:

• Making late or missed payments.

• Bankruptcy or Count Court Judgements (CCJs)

• Lots of credit applications in a short space of time.

• Exceeding your agreed overdraft or going over your credit limit

• Moving home a lot - lenders like stability.

Summary

There are a number of ways in which you can improve your credit score from ensuring you have a good payment history to registering your rent payments through to making sure you're on the electoral roll. A poor credit score or poor credit history can put off prospective lenders and make it harder to access credit or lead to higher interest rates if you are provided with credit.

You don't have to take out credit to improve your credit score - reporting rental payments and registering on the electoral are two examples.

Once you are given credit, its important to not miss payments and ensure you make on time payments - not doing so will impact your credit file.

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.