Navigating the world of credit scores can often feel like trying to solve a complex puzzle. But fear not! Improving your credit score is not as daunting as it might seem. Here’s a friendly guide to help you boost that all-important number, paving the way for a brighter financial future.

1. Understand Your Credit Score

Before diving into improvement strategies, it’s essential to understand what a credit score is. In the UK, credit scores are calculated by credit reference agencies like Experian, Equifax, and TransUnion. These scores are used by lenders to determine your creditworthiness – in simple terms, how reliable you are at repaying debt.

2. Check Your Credit Report Regularly

Knowledge is power! Regularly checking your credit report can help you spot errors or fraudulent activity early on. Each credit reference agency offers a way to view your report for free.  Scrutinise it for any inaccuracies and dispute them if necessary. Alternatively, subscribe to a service called Checkmyfile** which summarises your credit score from the major credit reference agencies.

 

3. Pay Bills on Time

This one might seem obvious, but it’s crucial. Late or missed payments can significantly dent your credit score. Set up direct debits or reminders to ensure all bills, including utilities and credit cards, are paid on time.

4. Reduce Your Debt-to-Income Ratio

Lenders look favourably upon individuals who aren’t maxing out their credit options. Try to keep your credit card balances low and pay off existing debts before applying for new credit.

5. Build a Credit History

Having no credit history can be as problematic as having a bad one. If you’re new to credit, consider opening a credit account like a credit card, use it sparingly, and pay it off in full each month. This demonstrates to lenders that you can manage credit responsibly.

 

 

6. Register to Vote

Here’s a simple yet effective tip: make sure you’re on the electoral roll. It helps credit agencies verify your identity and address, boosting your credit score in the process.

7. Limit Credit Applications

Each time you apply for credit, a hard inquiry is recorded on your report. Multiple applications over a short period can signal financial distress to lenders. Space out your applications and only apply for credit when necessary.

8. Maintain Old Credit Accounts

Contrary to popular belief, closing old credit accounts might harm your score. A long credit history with good repayment behaviour is beneficial. If it’s not costing you in fees, consider keeping that old account open.

9. Diversify Your Credit

Having a mix of credit types, like a mortgage, car loan, and credit card, can be positive for your credit score, provided they are all managed well. It shows lenders that you can handle different types of credit.

10. Use  credit repair tools

Consider opening an account with Loqbox which has a number of credit repair tools designed to improve your credit score.  It has a high review rating on Trustpilot and the company claims to have helped over one million customers so far.

11. Seek Professional Advice

If you’re struggling, don’t hesitate to seek advice. Organisations like the Citizens Advice Bureau or the debt charity StepChange can offer guidance and support for managing debts and improving your credit score.

Remember, improving your credit score is a marathon, not a sprint. Patience, diligence, and smart financial habits are your best allies in this journey. By following these tips, you’re well on your way to a healthier credit score and a more secure financial future. You know it makes sense.*

 

 

* RISK WARNING 

The value of investments can fall as well as rise. You may not get back what you invest. The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction. All information is based on our current understanding of taxation, legislation, regulations and case law in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future.  This blog is based purely on the author’s personal opinion and it is not our firm’s view.

**We can confirm that we have no affiliation with Checkmyfile.