Free Credit Report guides

11 tips on how to improve your credit score

A healthy credit score has many benefits. Not only are you more likely to get the lowest interest rates for credit cards and loans, it can stand you in good stead for the future.

1. Think about getting a credit card

The first rule of improving your credit score: show lenders you can borrow money responsibly.

To do this, you could think about getting a credit card. Providing you use it responsibly, it should help you improve your credit score by building a reliable repayment history.

Getting a credit card doesn’t mean you have to spend more money or spend beyond your means. Many think that by having one, you must want to overspend or treat yourself to something indulgent.

The truth is, you could use a credit card as you would a debit card. For example, paying for food shopping or travel. Providing you pay off the full balance each month, it’s a great way to show lenders you can borrow money responsibly — and at no extra cost to you.

2. Consider cutting your credit

Do you have old, unused credit cards? If so, you might be able to improve your credit score by cancelling some of them.

Some lenders are wary if you have a lot of credit available that you’re not using. There’s a concern you could spend it all at once, making it harder for them to get their money back if they let you borrow more.

However, tread carefully. If cancelling old cards brings you close to your limit — that is, you don’t have much spending headroom on your other cards — lenders might think you’re desperate for credit, and could be less likely to accept you.

It’s a bit of a balancing act. A good way to get an overview of your open credit accounts is to sign up for our Free Credit Report. Then you can easily spot accounts you can think about closing.

3. Get stable

Lenders are attracted to stability. There a few ways to show this, which could help improve your credit score.

Get a landline

This can sometimes help with security checks. It shows you’re settled at one address.

Avoid moving house too often

Lenders usually need your past three years of address history to consider a credit application. Often, you’re a more desirable candidate if you’ve lived in the same place for this time.

Keep your details consistent

It’s a good idea to use the same information on all your credit applications. Any inconsistencies can set off the fraud alarm bells. If your bank knows you as Matthew Smith, for example, you should use this name instead of Matt.

4. Use your savings

It doesn’t make sense to have savings and debt at the same time. This is because with the base rate at its current low level, the interest you pay on your debt will be much greater than the interest you make on your savings.

If you have savings, you should use them to clear your debt. This could help improve your credit score.

While many feel more comfortable having a bit tucked away for a rainy day, if you take action now to improve your credit score, you could have credit available should that raining day make an unwanted appearance.

5. Pay on time

Whether it’s a credit card, loan, mortgage, utility, or something else, keeping up to date with your repayments can work wonders for improving your credit score.

Missing one, on the other hand, will land a heavy blow to your credit score.

To avoid this, you should set up direct debits for the minimum monthly payment. Although only making the minimum payment each month can take you years (sometimes decades) to clear your debt, at least your credit score shouldn’t take a hit.

If you can, try to make a manual payment of a bit more so you clear your balance faster and pay less interest.

6. Limit your credit applications

Whenever you make a full credit application, a hard credit check is carried out on you. This leaves a record of the application on your credit file, which is visible to lenders.

Lenders often find a lot of applications unattractive — especially if they’re made in a short period of time. They can see that other lenders have rejected you and might think you’re too eager to borrow money.

Before you apply, it’s best to use an eligibility checker to see how likely you are to be accepted. Then you can apply for the credit you’re most likely to get, instead of applying for credit you’ll probably get rejected for.

While fewer credit applications won’t necessarily improve your credit score, it could improve your chances of being accepted for credit in the future.

7. Break financial ties

Have you taken out joint credit with someone, such as a mortgage or a loan? If so, your credit ratings could affect each other’s— particularly if one of you has a poor credit history.

In these situations, it’s best to break financial ties. If your partner has an undesirable credit history, there’s no reason this should affect yours. By keeping your credit arrangements separate, one of you can improve your credit score, while the other preserves theirs.

8. Check your credit report for mistakes

Sometimes, honest mistakes happen. It can be as simple as a misspelt name or incorrect address, but even that’s enough to make some lenders think your application might not be genuine.

However, errors could also be a sign of fraudulent activity. It’s important to check your credit report regularly to make sure your details are correct. Having accurate details can help you improve your credit score.

Get in touch with your lender if you spot any errors, and ask them to make a correction.

9. Register to vote

Being on the electoral register helps lenders confirm you are who you say you are, and that you have a fixed, verifiable address.

This also assures them that your credit application is genuine. This simple action is a great to way to improve your credit score and your chances of being accepted for credit.

10. Avoid payday loans

Payday loans can often make your credit situation much worse. Not only is the interest extortionate, but having one can seriously affect your future borrowing options.

Some mortgage lenders, for example, downright reject mortgage applications if you’ve ever had a payday loan, as it shows you’ve had financial difficulties in the past.

So, if you hope one day to buy your own home, payday loans should be avoided at all costs.

11. Add a Notice of Correction

A Notice of Correction is a 200-word statement that shows on your credit file. It’s a good chance to explain why there may be black marks against your credit rating — and this can sometimes appease lenders.

For example, perhaps you missed a credit card or loan payment because you lost your job, but have since found another and have been able to keep up to date or even clear your balance.

Maybe you took out joint credit with someone else who was responsible for running up the debts, but you’re now financially separated from them.

While adding a Notice of Correction isn’t a sure-fire way to improve your chances of being accepted for credit, it can sometimes help.

A Notice of Correction can slow down credit applications, though. This is because it trips up automatic systems, meaning a human must manually look at your credit application, instead of a computer — and that’s sometimes a good thing.

How to improve your credit score: start now

There you have it: 11 tips on how to improve your credit score. Start today, and you’ll be well on your way to getting into better financial shape.

Once you’re done, check your Free Credit Report and see if your credit score has improved.