How to boost your credit score
Credit reports usually go back as far as six years, with your financial behaviour in the last year being scrutinised most closely. If you’re looking to improve your credit score, there are a number of steps you can take.
The most important first step is making sure you’re on the electoral register at your current address. Failing to register, being registered at an old address or entering the wrong information on the electoral roll could result in your credit request being turned down.
Next, make sure you have a current account registered to the same address. This will enable credit score organisations to assess your financial behaviour.
Good payment behaviour
As utilities companies are increasingly sharing their account data with credit reference agencies, if you pay your water, energy and broadband bills on time this can help boost your credit score.
Showing that you use your credit card responsibly is also a strong way to improve your credit score. By making regular purchases on your credit card instead of your current account, and then paying off the balance on time and in full, you’ll start to build up a good credit record. Even if you just spend £50 a month, this will help you strengthen your credit score. Arranging a direct debit to pay off the minimum fee each month will make sure you never miss a payment. You can then pay off the rest of the balance manually. Remember that credit scores aren’t just about risk; companies lending credit want to know that you’ll make them a profit.
Importantly, make sure that you don’t use your credit card to withdraw any cash as it counts against you. The same goes for payday loans.
If your low credit score means you’re unable to take out a credit card, you can get a credit-rebuild card. Although this has very high APRs, if you repay your debt in full each month, this won’t affect you and will help you build up your credit performance over time.
Conversely, if you have too much credit available, even if you don’t use it, this can be seen as an issue. So it can be wise to cancel unused credit and store cards. However, bear in mind that if you have one or two accounts with a good credit history, it’s useful to keep these open as they’ll help your credit score with some lenders.
Be careful with your credit applications
Finally, beware of making too many applications for credit in a short space of time, as this can be seen as a sign that you’re being rejected for credit – or you’re planning to take out too much. What’s more, make sure that any applications you make are consistent. Credit lenders use only two anti-fraud agencies to identify potential problems. So if you put inconsistent information on applications to different institutions this will be picked up by the two anti-fraud agencies. So make sure you use the same telephone numbers and job titles.