How to improve your credit score

Published:

13 September 2010

Topic:

Video,Money

We've looked at why your credit score matters, but how can you improve a low credit score? Here are some easy tips that you can use to build your credit history...

Transcript

So, you've checked your credit score and it's lower than you thought - don't panic.
 
For some people that's because they don't have any credit history, whereas others may have mis-managed their debt in the past and that is why their score has been hit.

The good news is that you can improve or rebuild your score, although it can take some time to do. Bad credit events like CCJs and bankruptcy will stay on your file for six years, so even if you do boost your score, some lenders will still prefer not to take you on as a customer.

But whatever your situation, improving your credit score can help you access more competitive deals. So, how do you go about boosting it?

Register to vote

This is how lenders check you are who you say you are. If you're not registered to vote, you'll struggle to get credit. It's simple to get on the electoral role, so just contact your local council.

Use credit

Believe it or not, if you have no history of borrowing, you'll have a low credit score. That's because lenders don't know if you can handle debt well.

Start by applying for less competitive deals like a credit-builder credit cards and prove that you can handle debt responsibly. If you can pay off any debt early, that's also a bonus.

Check its right

Is all the information on your credit file correct? If you notice that a settled CCJ isn't listed as having been paid then ask the court for confirmation and send copies to the credit reference agencies.

Don't be rated down unfairly, make sure all the information is up to date!

Close unused accounts

If you have credit cards and overdraft facilities that you no longer use, these could be harming your score. That's because its credit you still have access to, so lenders may be wary about giving you more.

Close down any unused accounts before you apply for new borrowing.

There are loads of ways you can improve your credit score but the most important thing to do is to start managing your borrowing better now.

If you are really struggling and think you need some outside advice maybe a charity like Citizens Advice or National Debtline can help. There are also debt management companies, but make sure you go to a reputable one for advice and help.

If you have been rejected for a loan or credit card then don't just keep firing off applications. Making too many applications for debt in a short space of time can actually damage your credit rating further - step back, look at where you can improve your credit score and leave it a few months before you apply again.