How to improve your credit rating
There are methods to consider to help you improve your credit rating – here are MoneySuperMarket’s tips:
Download Credit Monitor: The best way to keep on top of your credit score is by tracking its progress. MoneySuperMarket’s Credit Monitor allows you to check your credit score as many times as you like without affecting your rating. It also offers personalised tips on how to improve your score.
Get on the electoral register: Simply by being registered to vote, you could improve your credit rating. It’s quick and easy to register through the gov.uk website.
Debt repayments: Try to keep on top of your repayments for any personal loans, mortgages or credit card balances.
Ensure a sensible use of credit: Make sure you keep spending on your credit card to a reasonable level as if you use a high proportion of your available limit, lenders may view you as being reliant on credit. A lower credit utilisation (for example no more than 25% of your available limit) every month will show a sensible use of your available credit. You also need to ensure that you can afford to pay off any balance on your credit card every month to avoid incurring interest and to ensure that you don’t get charges for any late or missed payments, which can also have an impact on your credit score.
Avoid multiple credit cards: If you’ve got a credit card that you’re no longer using, it could have a negative effect on your credit score. This is because having a large amount of available credit could make lenders think you can’t handle more. It’s advisable to close accounts of credit cards or store cards that you don’t use. Remember it’s not enough to simply cut up the card – you’ll need to contact the provider to close the account. You may find that your credit score drops temporarily when you close an account like this, particularly if it’s an account you’ve had for a long time. This is nothing to worry about, and your score will build up as you continue to manage your money responsibly.
Consider a credit builder card if you want to build on your credit score: If you have a low or no credit score, and you want to build on or improve it, you may benefit from taking out a credit builder credit card. Credit builder cards typically have low credit limits so you will not be able to borrow much money and higher than average annual percentages rates (APRs). As with all credit cards however, you should only take one on if you are sure you will be able to pay your balances in full on time and every month. Not only will you not incur interest on your debt, paying your balance in full shows lenders you can use credit responsibly.