Credit scoring can be complicated, but there are things that you can do to improve it…slowly! Whilst it can take months (maybe years) to improve your score, it can be done.
If you’re thinking that you might need to improve your score, a few things you could do are:
- Build your credit file. When lenders don’t know much about you, it makes them believe that you are a riskier bet than someone with lots of activity. You can do this by opening a bank account (if you don’t have one), get a credit card or small amount of credit and manage it well.
- Pay your bills on time. Failure to meet your household bills directly impact your credit file so make a conscious effort to pay them on time. Avoid getting into trouble by scheduling them all to be paid the day after pay day, then you can go into the month safe in the knowledge you won’t miss a payment.
- Register on the electoral roll. Make sure you are registered on the electoral role for your current address as its proof that you reside at that address.
- Here’s the tricky one – never use your full credit allowance. Whilst it might be the case that you can always meet your monthly credit card payments, try to only spend 25% of it. For example, if your credit limit is £5,000 – don’t spend more than £1,250 on your card each month.
Monitor your score with one of the many free credit checks available. Once you’ve got it to where you need it to be, now’s the time to nurture it by:
- Not making lots of credit applications. It’s a really simple rule, your credit score gets hit for every hard check that a company makes on your credit file.
- Close unused accounts. If you’re holding credit cards for a rainy day, just in case, think again and close them down as it could imply that you won’t be able to handle more.
- Keep within your limits. Only borrow what you know you can afford and avoid stretching it. Getting into trouble with debt has lasting implications, with CCJs, IVAs or even bankruptcy remaining on your credit file for up to six years.
- Check for fraud. Unfortunately, not everybody is as good as you and fraud does happen. Make sure that nobody is profiting at your expense by checking your file and addressing suspicious accounts.