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Home > Money Blog > Saving Tips > How to improve your credit score

How to improve your credit score

How you could improve your Credit Score with 8 helpful tips

Having a bad credit rating can understandably feel quite frustrating, especially for those who are looking to apply for a mortgage, car loan or other forms of finance.

If that sounds familiar, you’ll be pleased to hear that there are measures you can take to gradually improve your circumstances and credit score. You’ll also be pleased to hear that we offer a range of Bad Credit Loans to our customers, perfect for those who may need to borrow up to £15,000 who may have been refused by other lenders.

With these 8 tips you could improve your credit score and leave your old rating behind

Track your credit score

Some credit report services charge a fixed or membership fee to track or request your credit report. In recent years, however, many of these companies have changed their practices, instead offering a free service or opting to recommend credit cards and other offers on their websites instead of a credit check fee.

To you, this simply means that you can track your credit rating for free, as well as receive recommendations from the service on more ways to improve your credit record. Free services generate monthly reports, allowing you to track your credit rating improvements in real-time.

Space out applications for credit

While credit reference agencies aren’t necessarily told if you’re rejected for credit, they are able to see the frequency of applications you make and whenever a search is made by a lender.

Simply put, don’t apply for credit in quick succession.  If possible, find out if you are likely to be accepted for a new line of credit before applying to avoid credit checks being made unnecessarily.

Close unused credit cards and other accounts

Lenders often take more than just the amount you currently owe into consideration when checking your eligibility for finance, they often also consider the amount of credit you have access to. This can be unused credit cards, store credit cards and even mobile phone contracts.

While you may not necessarily owe money to these dormant lines of credit, the access is still there, and there is potential to borrow more in the eyes of prospective lenders. To rectify this, close unused lines of credit and finance, and check for active but unused services such as old mobile phone contracts.

Cut financial ties

Having a ‘financial partner’ who has a bad credit score may bring your joint-score average down by association. This could be in the form of still having a joint bank account or a joint mortgage with an ex-spouse following a divorce.

These financial links may impact your own credit rating, so if there is an opportunity to do so, maybe it’s worth cutting financial ties. If this is an option, be sure to inform the appropriate credit reference agencies of the disassociation to ensure the other person’s financial history and future dealings could reduce the impact on your credit score.

Register on the electoral roll

The electoral roll allows lenders to validate your stated place of residence, subsequently improving your chances of being eligible for credit.

Living at the same address, maintaining the same bank account and working for the same employer for at least a 12-month continuous period may also help improve your credit score.

Ensure all future repayments are made on time

Missed or late repayments can appear on your credit record for up to six years, so it’s crucial that you make all of your outstanding credit repayments on time. This can also apply to late payments on utility bills such as gas or electricity.

Pay off outstanding debts as soon as possible

Paying off your debts ahead of schedule may also help improve your credit score as this shows that you’re making a proactive effort to repay what you have borrowed.

If you’re able to set aside a small budget each month to pay off debt, it will certainly pay-off in the long term (no pun intended!).

Use credit to build a history

For some people, it’s maybe not a ‘bad’ credit history that prevents them from being eligible for credit, it’s a lack of credit history. Some lenders are reluctant to lend to those who have no credit history whatsoever, as they’re unable to see if they’re likely to make repayments on time or not. Using credit sources like credit cards in a sensible manner can help build a positive credit history.

For example, using the card to purchase essentials that you would otherwise still purchase (such as a monthly train pass or food shopping, keeping to your usual budget) and then paying off the full outstanding amount each month with a direct debit.

So there you have our 8 tips to credit score recovery Remember, improving your credit rating is a gradual process, and requires ongoing care and attention. If you’re looking to borrow money and currently have a poor credit rating, you might like to view our range of bad credit loans.

 

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