How To Boost Your Credit Score
A credit score is what lenders use to judge your suitability when you apply for certain products on credit.
On a smaller scale, this could be a new mobile phone or home appliances. However, your credit score may also determine your ability to get a mortgage, along other major life purchases down the line.
Therefore, it’s important to keep an eye on your credit score, and make improvements if you have a low score.
If you’re from a low income household, have been left in bad credit, or have no credit history, you could be looking for ways to improve your credit rating.
Here at Fair for You, we’ve put together the following guide on how to boost your credit score. Plus, more about what a credit score actually means to guide you.
What Is A Credit Score?
A credit score (sometimes referred to as a ‘credit rating’) is a way that financial institutions such as banks or lenders determine your creditworthiness.
Given as a 3-digit number, usually a score out of 999 will be on your credit file. Though the total maximum available score will also depend on the credit reference company in use.
Your credit score will be calculated based on your credit history, plus your financial history as a whole.
You may need to know your credit score for getting things such as:
So as you can see, your credit score has the ability to allow or deny you many things you may need over the course of your life.
How Do I Find Out My Credit Score?
There are lots of credit score report providers. This includes the likes of ClearScore (for your Equifax score), Experian and Credit Karma (for your TransUnion score). If you use online banking, you may also be able to see details of your credit score within your account.
It’s usually free to see your credit score. Though sometimes an in-depth credit report explaining more about your score across all three credit reference agencies is only available via a paid subscription.
What Is A Good Credit Score?
What makes a ‘good’ credit score will depend on the scoring system of the credit agency.
For example, in the UK, the following are the typical credit score ratings for the most common credit score providers:
*Credit score data sourced June 2023 via *https://moneynerd.co.uk/uk-credit-score-range/ and ^https://moneyplusadvice.com/blog/tips-advice/transunion-review-2023-a-comprehensive-look-at-the-credit-reporting-services/
While credit providers (and their individual ratings) vary, what remains the same is what you need to do to improve your credit score overall.
So it’s fair to say that wherever your credit score sits, you should always aim to improve it, or maintain it once it reaches a higher level.
Why Should I Improve My Credit Score?
Getting your credit score up as much as possible may increase the chances you will be accepted for certain lending products, such as a mortgage, mobile phone contract, loan or purchasing a car.
In short, there are lots of everyday, as well as large life purchases that can be difficult, if not impossible to purchase without a good credit score. That’s because a good credit score indicates you are less of a risk to lenders.
How To Improve Your Credit Score
It’s a simple fact that your credit score won’t improve by itself, especially if it’s lower than ideal.
So know that when it comes to boosting your credit score, you must take steps to do so, even if it may take time to see results.
If you have a low credit score, then it’s in your best interests to follow the tips below to improve your score as soon as possible.
Keep Your Use Of Credit As Low As Possible
Having credit (i.e. goods on credit, a mobile phone contract or a loan) won’t necessarily harm your credit score. In fact, if you keep up with any repayments it can actually boost your score.
But, it’s always good to avoid maximising all available credit. For instance, using your maximum credit card spending allowance each month.
Not using up your maximum allowance each month shows lenders that you aren’t solely relying on credit to get by. This is something creditors look out for, because not hitting your credit limits suggests you’ll be able to make repayments more easily.
Space Out Your Credit Checks
Having lots of hard credit checks in a short space of time can harm your credit rating. That’s because to lenders, it looks as if you cannot afford the things you need without credit.
Even if that’s the case, it’s easy to make things worse by overdoing the amount of credit checks you have against your file.
Experian recommends ‘no more than two to three applications every few months’. Sometimes, credit checks cannot be helped (and we also perform these here at Fair for You as part of our affordability checks).
However, the trick is not to overdo things by going on to have lots of credit checks at multiple lenders without waiting a while in between.
In other words, you don’t have to avoid credit checks altogether, but you do need to use them carefully.
Register To Vote
Whatever you think about politics, something we know you’ll be interested in is that registering to vote can boost your credit score.
Lenders really value this information as it helps them verify that you live where you say you do, thereby making you a more reliable and safe candidate for a loan.
Also, even the act of registering to vote signifies that you’re a good citizen who cares about your community. This sense of responsibility also paints you in a good light where lenders are concerned, so make sure you register to vote!
Don’t Move House Too Often
Staying put at one address shows stability in the eyes of credit lenders. This is especially the case if you’re paying a rent or mortgage each month along with council tax and bills registered to the same address.
While you shouldn’t stay living in a home you can’t afford just to boost your credit score, if not moving is an option that suits you, then this could work in your favour in terms of increasing your score.
Furthermore, many lenders will want to know how long you’ve lived at your current address. So if you want to increase your credit score by getting credit (and responsibly paying off), you might not be able to do this if you haven’t lived at your address for long enough.
Check Your Credit Report For Errors On Your Credit File
A quick win when trying to improve your credit rating is checking that the information that the credit report has on you is actually correct.
That’s because it’s common for credit reports to have errors on them, and this isn’t ideal when you need to maintain a good credit rating.
If you haven’t checked your credit report in a while, or know that your circumstances have changed then tell your lender so that they can offer you the best deal based on your current circumstances.
Getting rid of any errors can be an easy way to improve your credit rating without any stress or hassle.
Agree To Credit Repayments
Making repayments in a way that suits you can be a really easy way to build up a good credit rating, even if you’ve struggled to pay your loan in the past. If you have taken out a loan and have realised that you can’t pay it back in the way you agreed - don’t panic.
The worst thing to do in this situation is ignore your debt. Instead, you should look to agree to a payment arrangement that you can afford.
Ideally, you should only ever take on debt that you can afford to pay, but if your circumstances have changed then new credit repayments are the only way to move forward and maintain your credit rating.
By using a flexible payment option you will be able to budget and could continue to improve your credit rather than making it worse.
Keep An Eye Out For Fraud On Your Credit File (CIFAS Warning)
We’ve mentioned how having errors on your credit report can lower your credit score. But aside from companies getting things wrong, someone may be opening credit cards or taking a loan out using your personal information.
Data such as your name, date of birth and home address can sometimes be all it takes to commit fraud against someone else. This data can be stolen from your post or even your bin (if your personal data is not shredded).
However, many people also reveal a lot of personal data about themselves on social media sites too. So as well as keeping an eye out for possible fraud, be careful what information you reveal about yourself online.
Recovering money due to fraud is bad enough, but recovering your credit score due to fraud can take even longer.
If you suspect there is fraud in your name, then you must report it straight away to your bank or lenders, and put measures in place to protect your finances and credit rating.
Also, if you have fraudulently gained credit yourself, you may have what’s known as a CIFAS warning on your credit report. So make sure you never use false details to get credit, or allow anyone else to use your details to get credit.
Improving Credit Score FAQs
While no substitute for financial advice, we’ve answered some of the most common questions about improving your credit score or credit rating below.
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What Is A Credit Check?
A credit check is when a company pulls up your credit information, to see how well you’ve managed your credit in the past. Credit checks can be known as either soft credit checks or hard credit checks, depending on how much information a lender needs about you.
What Should I Do If I Have No Credit History?
It’s somewhat ironic that to get credit you need to have had credit in the past, so that you have a credit history.
As well as registering to vote, demonstrating responsible financial behaviour, such as paying your Council Tax, mobile phone contract and Spotify on time, or paying into savings can also give your score a boost.
What’s Bad For My Credit Score?
Several things can harm your credit score. This includes opening too many bank accounts too often, applying for credit too often, being close to your credit limit, missing payments and borrowing more than you can afford.
Does An Overdraft Improve Your Credit Rating?
Yes, an overdraft can help improve your credit rating but only if you use it wisely. This means never going over your agreed limit and regularly paying off what you owe.
How About Getting A Credit Card To Improve My Credit Rating?
If you are able to pay off your balance in full each month, then credit cards can be a way to improve your credit rating. That’s because you’re showing lenders you can manage your money and pay off what you owe.
But if you aren’t able to make each payment in full each month, credit cards can harm your credit score. So think carefully if you plan on using a credit card to improve your score.
Do Catalogues Improve Credit Rating?
Similar to credit cards, it is possible to improve your credit rating by ordering items via a catalogue - but only if payments are made on time and in full. Defaulting on catalogue payments will hurt your credit score, and could get you into serious debt.
Do Savings Improve Credit Rating?
Having savings helps you best manage unexpected expenses. However, the amount of money you have saved won’t improve your credit score directly.
Indirectly, the ability to use your savings to pay for things can avoid needing more credit, and therefore, avoid harming your credit score as a result.
Do IVAs Affect Credit Rating?
Yes, an individual voluntary arrangement (IVA) will be recorded on your credit file, and your credit score may go down.
Does Cancelling A Direct Debit Affect Credit Rating?
If you wish to cancel any products or services paid via direct debit (like a gym membership), then you must cancel it with the company directly.
Randomly cancelling a direct debit without telling the company may mean you owe that company money, which they can pursue you for.
Although having lots of direct debits can feel overwhelming, going about cancelling these or reducing payments in the right way may avoid your credit score from being affected.
Fair For You - Help Buying The Things You Need With A Low Credit Rating
Here at Fair for You, we’re a not-for-profit lending company. We can help you afford the items you need for your home and family at a price that suits you.
Although we will run a credit check before offering you a loan, having a low credit score does not automatically mean we can’t help you. Instead, we’ll consider several aspects as part of our application process.
If you have any questions about our loans, including our shopping card and food club cards, please see our FAQs page.
Or if you’re ready to start shopping with us head to browse all products to see the items we have available.
Need any more help? Please contact us and we’ll be in touch.