Thanks to tools such as MoneySavingExpert’s Credit Club, it’s now free and easy to check your credit report. But while knowing this is important, understanding how to improve your credit score is what will really help you to improve your financial health.
Here are 10 steps that will help you to improve your credit score:
1. Get hold of your credit report
If you get turned down by a lender, apply for your credit report before making any further applications.
Try to find out why you have been refused by the lender, to see if you can resolve the problem before applying elsewhere.
2. Pay your bills on time
Many people forget to pay a credit card bill or loan repayment before going on holiday and pay it couple of weeks late when they return.
But this could have a negative impact on your credit rating for a long time. That’s why it’s important to pay your bills on time and set up direct debits where possible so they’re not missed.
3. Build your credit history
If there’s no evidence that you’re a responsible borrower who pays back what you owe (because you’ve never borrowed money before), it can actually work against you.
4. Get on the electoral roll
Registering on the electoral roll provides proof of address and is checked as part of your credit score. If you’re eligible to vote, registering to vote will also help improve your credit score.
For students, it doesn't matter if this is your term-time address or your parents’ address. Just make sure you are on the register and that you use the same address on any borrowing applications you make.
It helps if you don’t change address too often, and if remember to register to vote again when you do move.
5. Pay off County Court Judgments (CCJs)
Even though CCJs remain on your file for six years, they will be marked as settled when you pay them off.
Check your credit report to see if they are marked correctly, as the court should update the credit reference agency when you pay.
If there is a mistake and you need proof of payment, you may have to apply to the court for a ‘certificate of satisfaction’. You have to pay a fee for this, but it will improve your credit rating.
6. Use credit cards wisely
If you apply for a credit card for the first time, you’re likely to be offered one with a high rate of interest – so ideally only use it for what you can afford to pay back in full within the interest-free period.
It’s a good idea to set up a direct debit for the minimum payment so you always pay on time, and then pay off more on top when you can.
7. Close unused credit card accounts
If you’ve applied for various credit cards over the years and now don't use some of them, consider closing unused card accounts.
A large overall credit limit, even if unused, could be seen negatively by some lenders.
8. Search for credit quotes carefully
If you want to compare credit cards or compare loans, it’s a good idea to use our Smart Search tool.
This tool will assess your eligibility without leaving a mark on your credit file - and can save you a lot of time when you come to apply.
9. Get mortgage quotes the right way
If you are applying for a mortgage, find out if the lender can register a ‘quotation’ search on your credit report instead of a ‘credit application’ search. A quotation won’t have a negative impact on your credit rating in the future.
10. Check your credit report regularly
You need to make sure the information held about you is correct, and amending any mistakes you find is an easy way to improve your credit score.
Find out how you can do this for free with MoneySavingExpert’s Credit Club.