How can I improve my credit rating?
You will improve your credit rating by showing signs of being financially prudent. In order to improve your credit score, you need to take actions that make you a safe bet in the eyes of credit agencies and, by extension, lenders. While this may sound daunting, many of these steps are very straightforward. Just by following the ten simple steps below you will be well on the way to a good credit score.
If you have a bad credit rating and you need a loan, you may want to visit our bad credit loans page.
Ten simple ways you can improve your credit rating
Check your credit file
You can check your credit report from the main credit rating agencies by paying a small fee or by taking advantage of a free trial. You are checking to make sure that the report is accurate. If there is any erroneous information on your credit report you can get it removed by contacting the relevant lender.
Register to vote
Getting yourself on the electoral role is possibly the easiest way to improve your credit rating. This is because it proves you are who you claim to be and you live where you say you live. This is also a sign of stability in your life, which is valued by credit agencies.
Disassociate yourself from a financial partner
If you are financially linked to someone with a bad credit rating, you should disassociate yourself with that person. When you take out a joint mortgage or bank account, you automatically become financially linked to the person you’ve taken it out with and, if they have a bad credit rating, it could impact on yours. If you have split up with your partner, husband, or wife, or the joint financial product is no longer between you both, you should update the credit reference agencies. If you don’t, their financial dealings could continue to have an impact on your credit score. To learn more about this, click here.
Close any unused credit cards and accounts
Lenders often look at the amount of credit you have access to, as well as the total amount of debt you have. With this in mind, you should close any credit accounts that you don’t need or use anymore.
Make all repayments on time!
Missed and late repayments can stay on your credit file for up to six years. If you want to improve your credit score, make sure all your repayments are made and on time. Providing you keep up with all current and future repayments, your credit rating will also naturally improve over time as most negative marks on your file, such as late payments and CCJs will be removed after six years.
Pay off your debts
Ultimately you will need to start paying off your debt to improve your credit score. If possible, pay off more than the minimum payment. This will show you can manage your debt and will help you clear your debts at a faster rate.
Build your credit history with a credit card
Credit builder credit cards can help you build your credit score. You should make a couple of purchases a month and pay it off in full by the end of the month. This is an indicator that you can be trusted to manage credit.
Use a prepaid credit card
Prepaid credit cards charge a small monthly fee and are, as the name suggests, prepaid. By using prepaid credit cards, you can have a positive entry in your credit file showing you have repaid a debt. Prepaid cards do not require credit references.
Don’t make lots of applications
It’s also important to be aware that every time you apply for a loan or other form of credit, your credit history is marked with an enquiry. Making too many enquiries in a short space of time may indicate to lenders that you need funds urgently or that you’re taking on debts that you can’t afford to repay. To improve your credit score, try to avoid making frequent applications for credit and always check your credit score before making an application to assess whether it’s likely you’ll be approved.
Show signs of stability
It sounds obvious, but everyone would prefer lending money to someone who is stable in their life over someone who is not. The more stable your life appears, the more attractive you will be to lenders. Even having a fixed landline can make it easier for agencies to verify who you are, and so can be a small positive on your credit report. It’s also important to keep details consistent between applications. Therefore, you should try and always use the same job title, phone number etc on different applications.
If you follow these simple steps, you should start to build your way towards a good credit score.
You may also be interested in our article on the Ten ways you can build a bad credit score.