There are many easy ways in which you can boost your credit score. Having a higher credit score can mean that you benefit from a range of financial incentives.
It can also help your financial investments and also save you money in the long run.
Having a good credit score can mean you will have more choices when it comes to credit cards, bad credit car finance, loans, mortgages and a range of other finance options.
You’ll also be likely to receive lower interest rates which will reduce the amount you will pay overall on any type of loan or finance.
If you are applying for a credit card you can also often benefit from a more generous credit limit.
How can you increase your credit score?
Check your credit file
- The first thing you should do before you start increasing your credit score is to check your credit file.
- Your credit file will show you your credit score as a numerical digit and also your credit history.
- You should make sure all your information is correct and up to date as this can affect your score. You should also check your credit checks.
- If you see a credit application that does not look right, you may have been the victim of a fraudulent credit application in your name.
- If you see anything that needs updating or challenging, then you can contact your credit referencing agency who provided your credit file.
Register on the UK electoral roll
- Even if you don’t care about voting in the UK elections, you should consider registering on the UK electoral roll.
- Whilst it doesn’t directly increase your credit score, it can make it easier for lenders to verify who you say you are and speed up your application.
- It also prevents any fraudulent applications as they can use your living address to very your identity. You can register on the electoral roll on the GOV.UK website.
Make all your payments on time and in full
- One of the easiest ways to increase your credit score is to make sure you meet all your repayment deadlines and make any payments on time and in full.
- You should also always make more than the minimum amount needed on your credit card as repeatedly only making the minimum payment can decrease your credit score.
Get rid of any financial links you no longer need
- If you take out finance with someone else for example through a joint car finance application, then you will become financially linked.
- If your financial link has bad credit, then their scire could be holding yours back too.
- If you no longer have any active credit with your partner, then its best to disassociate yourself.
- You can do this by contacting your credit referencing agency if it is still showing up on your credit file.
Keep your credit utilisation low
- When you take out a credit or store card you will get a credit limit. You should aim to only use around 25% of your credit limit or lower.
- For example, if your credit limit is £1000 then you should try to use £250 and under.
- This shows more responsible lending and can help to increase your credit score.
- Maxing out credit cards and store cards ca indicate to lenders that you aren’t good at managing your credit.
High level of existing debt
- If possible, you should try to pay off any existing debt before you start applying for more.
- When you apply for credit, banks, building societies and lenders will look at the credit that is already available to you and if you are struggling to manage that then they may decide that you don’t need any more.
Build your credit history when you have no credit
- It’s a common misconception that having no credit means that you will automatically have a good credit score.
- However, if you haven’t taken out any credit in the past then how will lenders know which type of borrower you will be? You could consider starting small and getting your name on utility bill or having a mobile phone contract.
- Or you could use a credit building credit card. Just make a few purchases on your card and pay them off in full each month to build up a solid credit history.
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