How I Improved my Credit Score and How You Can Too

Credit scores can be a confusing business, I only started paying attention to my credit score over the last couple of years. Prior to this, it all seemed a little complicated so I ignored it and didn’t give it much thought. Over the last couple of years, I have learned a lot about credit scores, what they are, how they work and also how I can improve my score. Since then I have been working to keep improving my score so it’s as high as possible and stays in a good range.

If you’re looking to improve your credit score, but like I was, you’re not sure how then I have shared the tips I used to increase my score below. These tips can help you improve your credit score over time making it more likely that lenders will accept your application for credit, this could include an application for a credit card, phone contract or even a mortgage.

Register on the electoral roll

If you have been refused credit recently and you’re not sure why it could be because you’re not registered on the electoral roll. Lenders want to verify your identity and one way they do this is by checking your details on the electoral roll. You can register here if you’re not already on the electoral roll or if you need to update your details.

Do your research when applying for credit

If you decide to apply for a loan, credit card or any other form of credit it’s important that you know exactly what you’re applying for, what the APR will be, the repayment terms, credit limit etc. There are a lot of great resources online where you can learn everything you need to know to make an informed choice. Cash Lady has a lot of great resources in their guides which might prove helpful in learning about credit.

Use a credit card little and often

Lenders want to see that you are responsible with your money and that you are able to pay back what you borrow in a timely manner. The best way to do this is to use your card little and often, make small purchases and pay off the full amount you have borrowed each month. This will show lenders you are responsible and will help improve your score over time.

Keep credit applications to a minimum

If you apply for a lot of credit in a short space of time this could reflect negatively and stop lenders accepting your application. Each time you apply for credit a search is recorded on your credit file and if you have a lot of searches this can be a red flag to lenders.

Use an eligibility checker

If you’re looking to apply for credit it’s important to find out which lenders are more likely to accept you, you can do this by using comparisons websites such as Money Saving Expert and Experian which will let you know if you have a high chance of being accepted.

Check your credit file for errors

Sometimes it’s possible that a mistake is made on your credit file which could result in you being turned down for credit, for that reason, it’s important to regularly check your file for errors. If you notice an error contact the credit score provider you are using and give them the details of the error so it can be corrected. I noticed last year that my address was recorded incorrectly on my credit file so I contacted the company with the details and this was changed within 24 hours.

Make payments on time

The worst thing you can do which will negatively affect your credit rating is to miss or make late payments on your bills. If you make a late payment or miss a payment this will be recorded on your credit file and will make other lenders less likely to accept you for credit in the future.

Keep your utilised credit low

It’s recommended to keep your credit utilisation low at around 25% because this will be looked upon favourably by companies and will help improve your credit score. For example, if you have a total credit availability of £1,000 it’s recommended to keep an available credit of around £750.

Close unused credit accounts

If you have old credit accounts such as store cards or credit cards which are active but you no longer need or used then it’s a good idea to cancel these accounts. Lenders could see that you have a high amount of credit and might be unwilling to lend you more so if you close unused accounts this will reduce your amount of available credit.

Stay within your means

When applying for credit it’s essential that you have the ability to pay back what you borrow and in a timely manner. If you borrow money and you can’t pay it back this will cause defaults to be recorded on your credit file and could even result in a CCJ, IVA or even bankruptcy if you can’t afford to pay the money back.

Don’t withdraw cash on your credit card

Withdrawing cash from your credit card is charged at a higher interest than purchases so using your credit card to withdraw cash will cost you in the long run. Even if you pay your bill off in full you will still be charged the interest for using your card to withdraw cash. Some companies also look at cash withdrawals negatively and think it shows users aren’t managing their money well so it’s important to take this into consideration.

If you’re currently saving money or looking to ways to save money while you improve your credit score why not take a look at these 6 quick tips to help save you money and 5 ways to make money from home.

I hope you have found the above tips useful if you have your own tips I would love to hear them.

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