Whenever we take any credit, such as when we take a new mobile phone contract, credit card or mortgage, you will usually have your credit score checked. This helps the lender decide if you meet the criteria for their product. They are usually looking to see if you’re managing your finances okay. There are lots of misconceptions around your credit score, however, you can improve your score over time. Here are our top tips to help you improve your credit score:
Check your credit report for inaccuracies
You can access your credit report for free at Equifax or Experian. It’s a really good idea to check it regularly and make sure all the data it contains is accurate. If it doesn’t then speak to your lender to ask them to amend it. If they don’t or won’t do this then you can contact the credit reference agencies and ask them to review the data.
Another way to amend your file is to place a notice of correction on your report. This can mean it takes longer for your application to be considered when you apply for credit as the lender will need to check the correction notice manually, but it may help you overcome any negative points on your credit file if you can explain them.
Register to vote at your address
This give points on your credit report so make sure you get on the electoral register. You can do this online at Gov.uk. If it annoys you that the council may sell on your data, you can opt out of the open register. The credit reference agencies use the full register so they will still get the data they need.
Make sure you pay all your payments on time
Failure to pay can result in defaults and these are shown on your credit score, negatively affecting it. You could set up a direct debit for the minimum payment just to ensure it’s being paid.
Are you linked to another person on your report? If so how is their credit score? If they have a poor score it can affect yours. You are usually only linked via joint products or some utility bills. Remove anyone you are no longer associated with such as ex-partners.
Don’t apply for lots of products
When you apply for a new product such as a loan or credit card, a search is performed on your credit file. If you have too many of these in a short period of time it can negatively affect your score. Try to use lenders who use a soft search to check your file. You can see these searches but lenders can’t, so it reduces the impact.
Payday loans are viewed badly
Some lenders view payday loans badly and they will potentially reject you if they see it on your credit score. Many payday loans have extremely high interest rates and they aren’t preferable forms of credit, so it might be worth avoiding them if you can.
Keeping an eye on your credit report and applying these techniques will really help to improve your score over time. Remember any items stay on your report for six years, so often it is a case of waiting for time to pass to see improvements to your credit score. Have you tried any of these techniques with success?