How to improve your credit score

Last month we shared advice for those looking to secure a mortgage in Horsham, or West Sussex. One of the elements we touched upon was the impact that your credit score could have on your ability to secure mortgage. It’s not just mortgages though, a bad credit score can impact your chance of a successful application for credit cards, loans or personal finance agreements for cards or other high-value products.

Whenever you are looking to borrow money, having a good credit score, or credit rating, is absolutely crucial. Lenders will look at this to see if you are a strong prospect for them to give money too and will evaluate your ability to pay them back based on your track record with other lenders. If you have defaulted on payments in the past – no matter how large or small – this will flag up as a warning to them and could affect your changes of borrowing approval.

Thankfully, you can get a heads-up as to how lenders will view you by checking your credit score for free and If things don’t look good, there are steps you can take to improve it.

Practical steps to improve your credit score/credit rating

If you discover you have a low credit rating, don’t worry just yet. Negative marks can remain on your file for up to six years and after this all records of missed payments, defaults, CCJs and bankruptcy will be erased.

Don’t panic though, as it’s the recent information that usually bears the most significance. Not all lenders look at things in the same way either, so even if you have some of these marks against you, all is not lost. There are things you can start actioning now to start seeing changes.

Credit history is built over time, so these changes won’t happen immediately, but they will happen. The more on-time payments you begin to make, the more your credit rating will continue to go up. Conversely, the longer you leave it and don’t address things, the more your credit rating will decrease, so it’s never a bad time to start!

Make sure you are registered to vote

Simply being registered can make it easier to get credit.

Check for mistakes

Even something as simple as a past address that hasn’t been updated can affect your credit application, so make sure everything is accurate and as it should be. If it’s not, inform the credit reference agency. They will then have 28 days to remove the incorrect information or tell you why they don’t agree with your findings.

And fraud…

Unfortunately, identities get stolen all the time. Make sure no one has applied for credit using your details and if they have, immediately get in touch with the credit reference agency to get your file updated.

Don’t miss bill payments!

Failure to miss a ‘small’ bill payment still shows you are not as reliable as if you had paid it on time.

Make sure no one else is dragging you down

Are you linked to a partner, spouse or friend through a joint account? Their personal rating could affect yours if it’s not favourable.

Eliminate existing debt

Not always as easily done as said, but if you are sitting on money in a savings account, it might be worth using it to clear debts where possible and bring your overall amount owed down.

Your credit score does not just help a lender decide whether you lend to you, but also how much they are prepared to lend and how much interest to charge you. The better your credit score, the more favourable outcome you will have in all of these areas.

For further advice on improving your credit score, please get in touch.

This article does not constitute financial advice and should not be construed as such.