The better your credit rating, the better the loan deals you can access. By improving your credit score, you’ll have a wider choice of lenders and loan options, lower interest rates, and you’ll be able to access higher loan amounts. What’s not to like?
10 tips on how to improve your credit score fast
Poor credit is holding many Brits back from making big life decisions like getting a mortgage or applying for finance. The truth is, many of us haven’t checked our credit scores (49% of UK adults have never accessed their report, according to Experian), so we don’t know how poor our credit is until it’s too late.
If you’re considering applying for a loan and know you have a bad credit score, what can you do to improve it? This blog explores 10 easy ways you can improve your score.
1. Check credit report for mistakes
Mistakes on credit reports are pretty common, with about 10 million Brits having found some. According to Finance Monthly, some of the most common credit report mistakes include clerical errors (usually because you have the same name as someone else), an account reported as closed when it’s open and errors with personal information.
How do you find these mistakes? By simply checking your credit score with a reputable credit agency. Spend some time poring through your report and checking all your information is correct.
Check your credit report with any of the three main Credit Reference Agencies (CRA) below:
Find out how to check your credit score for free below.
2. Register to vote /get on the electoral register
Sounds simple, right? And it is. Registering to vote is sometimes enough to boost your credit score. Why does being on the electoral roll matter? Because it confirms your place of address. Before a lender loans you money, they’ll run a hard credit check which means confirming where you live and basic details. Your address can easily be matched with the address on file for your registration to vote, which makes the process easier for lenders.
3. Make sure your address is up to date
If your address isn’t up to date, your credit file isn’t up to date. Go into your credit file and ensure you’ve updated all your contact details to the correct ones. Again, this way, lenders can easily verify you are who you say you are. Basically, it’s about making it as straightforward for the lender as possible when it comes to verifying your details.
4. Keep your credit usage low
If you’re currently using a credit card, that’s absolutely fine, many people do — in fact, there were 66 million credit cards in issue as of February 2020. It doesn’t matter that you have one — it’s how you use it that matters. If your credit utilisation score exceeds 50%, this could raise alarms with future lenders.
What is a credit utilisation score?
It’s a score based on how much you’re using when it comes to your credit limit. If you’re consistently spending all the credit limit available to you, lenders might consider this when making their lending decisions. Try and keep your spending under 30% of your total allowed credit limit, particularly if you’re hoping to secure a mortgage or a personal loan.
Credit utilisation example:
Let’s say John has three credit cards that he uses regularly. The table below shows how much he has spent on them and the total available credit limit:
| Balance | Limit | Credit Utilisation % | |
|---|---|---|---|
| Card 1 | £100 | £2,000 | 5% Low |
| Card 2 | £2,400 | £3,000 | 80% High |
| Card 3 | £2,000 | £10,000 | 20% Low |
| Total | £4,500 | £15,000 | 30% Low |
As you can see, John spends the most on credit card two and has a high credit utilisation ratio of 80%. However, credit utilisation considers all available credit, not just a single credit card. Across all credit cards, John has a calculated credit utilisation ratio of 30%.
Although it’s important to bear this in mind when you’re applying for a loan, it’s not the only thing that lenders look at when making their decision, so don’t panic too much if you spend more.
5. Pay credit and bills on time
This one is a basic requirement for securing any personal finance. Lenders will want to ensure they’re lending responsibly, which means checking the financial history of all applicants, including past debt repayment. So make sure you pay your bills and any debt repayments on time and never miss a payment; this way, you’re showing the lender that you can repay debt promptly and that you’re a responsible borrower.
6. Avoid applying for too much new credit
Every time you make a credit application and lenders perform a credit check, these checks appear on your credit file. The more you have, the more doubt this creates for the lender — namely, asking themselves why you’re applying for so much credit elsewhere. So keep applying for credit to a minimum so it doesn’t negatively affect your credit score.
7. If you don’t have credit, get some
This might seem like the last thing you should do to improve your credit score, but you can’t prove to lenders that you can make repayments on time without a credit history. You don’t necessarily have to apply for a short term loan to build your credit history; things like paying your energy bills on time or having a monthly mobile phone contract in your name can all help you build up your credit score.
8. Be aware of joint accounts
If you’ve got a joint account with your partner, be aware that if they fail to make a repayment, they incur a penalty for late payment, or they become overdrawn on the joint account, this can negatively affect your credit score as well as theirs. So think carefully before signing a joint account agreement, particularly if you’re hoping to secure finance in the immediate future.
9. Check for fraudulent activity
Credit card fraud is on the rise, with Experian reporting that it hit a five-year high, increasing by 42%, at the tail end of 2021. So you need to remain alert when checking your credit report. To spot any fraudulent activity, you’re best familiarising yourself with what your credit report includes so you know what you’re looking for.
The fraudulent activity could include:
- Credit accounts you didn’t open
- A higher outstanding balance than you’re aware of
- An increase in ‘hard’ searches on your account
If you notice any of these, you can flag them up immediately with Action Fraud. Don’t forget to notify your bank account of any fraudulent activity so they can freeze these lines of credit.
Keep checking your account regularly to ensure no more fraudulent activity goes undetected.
10. Ask for higher credit limits
Again, this piece of advice might sound odd. But by increasing your credit limit will lower your credit utilisation. This shows lenders that you’re only using the credit when needed, and you’re not completely reliant on finance. It also shows you can easily spend within your means, and making repayments on time helps lenders understand you’re a good borrower.
Remember: When you request a credit limit increase, the provider may perform a hard credit search to find out if you're eligible. A hard credit search may impact your credit score.
How to check your credit score for free
Most Credit Reference Agencies offer paid subscriptions to obtain your credit report, but there are multiple ways you can check your credit report and score for free - here's how!
- Experian - Get your Experian credit score for free by signing up for a 30-day free trial, or by signing up for the Money Saving Expert Credit Club and access your report for free.
- Equifax - Get your Equifax credit score for free by either signing up for their 30-day free trial, or access it for free through ClearScore.
- TransUnion - Get your TransUnion credit score for free with Credit Karma.
Request your free statutory credit report
You can also get your credit report for free by requesting a 'statutory report' from any of the UK Credit Reference Agencies. Your statutory report shows you all the information the CRA holds about you and your financial health. You can also request a paper copy too.
You can check all the information kept by four credit reference agencies (the fourth is Crediva) in one place at CheckMyFile. But you’ll only have free access for 30 days, then it's £14.99 a month.
What is a credit score?
A credit score is a rating generated by credit reference agencies based on your financial history — i.e. how you’ve managed debts and bills. Your credit score will consist of just three numbers and each credit reference agency has their own scoring system.
There is no one number you should aim for with your credit score, lenders won’t just look at your score to determine whether they should lend to you. They’ll take into account a whole host of other factors including income and employment history, your collateral (if required), how long you want the loan for etc.
How does a credit score work?
A credit score acts as an indicator of how risky you as a potential borrower, and is used by lenders to determine whether they want to lend you or not. It’s also a helpful tool for consumers to understand how likely they are to secure finance and highlights some aspects that might be holding them back.
Remember: The higher your three-digit credit score, the more favourable you look to lenders. And, subsequently, the better your loan and interest rate options will be.
What are good credit scores?
Each of the three main Credit Reference Agencies uses a different scoring system, so it’s a good idea to check your credit report with them all. The tables below show what a good credit score would be for Experian, Equifax and TransUnion.
Experian credit score range
Experian's scoring system is scored between 0 - 999 and ranges from very poor to excellent. A good credit score with Experian would be 881 or above.
| Experian Score | Band |
|---|---|
| 0 - 560 | Very Poor |
| 561 - 720 | Poor |
| 721 - 880 | Fair |
| 881 - 960 | Good |
| 961 - 999 | Excellent |
Equifax credit score range
The Equifax scoring system is scored between 0 - 1,000 and ranges from poor to excellent. A good credit score with Equifax would be 531 or above.
| Equifax Score | Band |
|---|---|
| 0 - 438 | Very Poor |
| 439 - 530 | Poor |
| 531 - 670 | Good |
| 671 - 810 | Very Good |
| 811 - 1000 | Excellent |
TransUnion credit score range
The TransUnion scoring system is scored between 0 - 710 and ranges from very poor to excellent. A good credit score with TransUnion would be 604 or above.
| TransUnion Score | Band |
|---|---|
| 0 - 550 | Very Poor |
| 551–565 | Poor |
| 566 - 603 | Fair |
| 604 - 627 | Good |
| 628 - 710 | Excellent |
What are the benefits of improving your credit score?
If you improve your credit score to a good credit score, you’ll have more choices regarding lenders. You won’t just be limited to lenders who loan to borrowers with a bad credit score.
With an improved credit score, you’re also more likely to be offered:
- A better interest rate
- A higher credit limit
- Access to various financial products such as loans, mortgages and credit cards
How long does it take to improve a credit score?
Improving your credit score can take weeks or sometimes months. Making these changes, although some you can make immediately, you won’t see their effects immediately. So if you’re thinking about applying for a mortgage or a loan in a few month's time, it’s a good idea to start making these changes straight away so you can benefit from them when you need them.
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