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Improving Credit Score

Your credit score is a numerical representation of your creditworthiness, and it’s one of the key factor’s lenders consider when you apply for credit. It’s calculated based on the information in your credit report, including your payment history, the amount of debt you have, and the length of your credit history.

A man trying to charge his credit score.

Why is Your Credit Score Important?

Your credit score is important because it can affect your ability to obtain credit, the interest rate you’re offered, and even things like renting a flat or getting a mobile phone contract. Lenders use your credit score to assess the risk of lending to you. If you have a high credit score, lenders see you as a lower risk, which means you’re more likely to be approved for credit and get favourable terms.

What Affects Your Credit Score?

According to Experian, several factors can affect your credit score, even without you being aware of it. Some of the most common factors which could be impacting your credit include:

  • your payment history
  • the amount of debt you have
  • the length of your credit history
  • the types of credit you have
  • any recent credit applications
  • your credit utilisation ratio

It’s important to understand these factors and how they affect your credit score so you can take steps to improve it.

How to Improve Your Credit Score

Improving your credit score isn’t something that can happen overnight, but there are steps you can take to gradually increase it over time. These steps are recommended by UK leading credit reference agencies, such as Experian.

01. Regularly Check Your Credit Report

One of the first steps to improving your credit score is to regularly check your credit report. This allows you to see the information that lenders see when they check your credit. It also allows you to spot any errors or fraudulent activity that could be negatively affecting your score.

02. Make Your Payments on Time

Your payment history is one of the most significant factors in your credit score. Making your payments on time shows lenders that you’re reliable and can manage your finances responsibly. If you’ve missed payments in the past, it’s never too late to start making them on time. Over time, this can have a positive impact on your credit score.

03. Register on the Electoral Roll

Registering on the electoral roll can improve your credit score as it provides proof of address and identity to lenders. If you’re not already registered, you can do so online.

04. Pay Down Debt

Reducing the amount of debt you owe can also improve your credit score. This is because the amount of debt you have is one of the factors used to calculate your score. If you’re struggling with debt, consider speaking to a debt advice service who can provide free and impartial advice.

05. Don't Close Old Credit Accounts

While it might be tempting to close old credit accounts, especially if you’re not using them, this can actually hurt your credit score. This is because the length of your credit history is a factor in your score, and closing old accounts can shorten this history.

Using Credit Cards to Improve Your Credit Score

UK credit reference agency, Experian, have expressed that credit cards can be a useful tool for improving your credit score, but it’s important to use them responsibly.

Use Your Credit Card Regularly, But Keep the Balance Low

Using your credit card regularly and paying off the balance in full each month can show lenders that you can manage credit responsibly. However, it’s important to keep the balance low. High credit card balances can negatively impact your credit score, even if you pay them off in full each month.

Don't Apply for Too Many Credit Cards

Each time you apply for a credit card, a hard search is carried out on your credit report. Too many hard searches in a short space of time can negatively impact your credit score. It’s better to apply for credit sparingly and only when you need it.

An advisor and customer holding up two credit cards.

How Internet Banking Can Help Improve My Credit Score

Internet banking can be a powerful tool in your quest to improve your credit score. It provides you with easy access to your financial information, allowing you to monitor your accounts, make payments on time, and manage your finances more effectively.

Monitor Your Accounts Regularly

With internet banking, you can check your accounts at any time, from anywhere. This allows you to keep a close eye on your balances, track your spending, and make sure you’re not going over your credit limits. Staying within your credit limits and managing your accounts responsibly can have a positive impact on your credit score.

Make Payments on Time

Internet banking makes it easy to make payments on time. You can set up automatic payments for your bills, ensuring that you never miss a payment. As your payment history is a significant factor in your credit score, making payments on time can help to improve it.

A computer with two arrows pointing in opposite directions.

How Experian Boost Can Help Improve Your Credit Score

Experian Boost is a new feature from the credit reference agency Experian that could help improve your credit score. It allows you to add more information to your credit report, which could make you look more attractive to lenders.

How Does Experian Boost Work?

Experian Boost works by allowing you to add positive payment data to your Experian credit report. This can include things like regular payments for your council tax, savings, and even Netflix subscriptions. These regular payments show lenders that you can manage your money responsibly, which could help to boost your credit score.

Who Can Use Experian Boost?

Experian Boost is available to anyone who has an Experian account. It’s free to use and could help to improve your credit score, especially if you have a thin credit file or have had credit problems in the past.

In conclusion, improving your credit score is a journey that requires time, patience, and responsible financial behaviour. However, with the right approach and tools like internet banking and tools like Experian Boost, you can make significant strides towards achieving a better credit score. Remember, a good credit score can open up a world of financial opportunities, so it’s worth putting in the effort to improve it.

The Impact of Missed Payments on Your Credit Score

Missing payments on your credit accounts can have a significant negative impact on your credit score. It’s one of the key factors that lenders look at when assessing your creditworthiness.

The Consequences of Missed Payments

When you miss a payment, it gets recorded on your credit report. This can lower your credit score and make it harder for you to get credit in the future. If you miss several payments, the impact on your credit score can be even more significant.

How to Avoid Missed Payments

Experian suggests that setting up direct debit to cover your bills is one of the best ways to avoid missing a payment.

This ensures that the payments are made automatically each month, so you don’t have to worry about forgetting to make a payment. If you’re struggling to make your payments, it’s important to speak to your lender as soon as possible. They may be able to help you with a repayment plan or other solutions.

The Role of Credit Reference Agencies in Your Credit Score

Credit reference agencies play a crucial role in your credit score. They collect and maintain information about your credit behaviour, which lenders use to assess your creditworthiness.

Understanding Credit Reference Agencies

There are three main credit reference agencies in the UK: Experian, Equifax, and TransUnion. These agencies collect information about your credit behaviour, including your payment history, the amount of debt you have, and the types of credit you have. They use this information to calculate your credit score.

Checking Your Credit Report

It’s important to check your credit report regularly to ensure the information is accurate. You can request a free copy of your credit report from each of the three credit reference agencies once a year. If you find any errors, you can dispute them with the credit reference agency.

The Importance of Building a Good Credit History

Building a good credit history is crucial for improving your credit score. It shows lenders that you can manage credit responsibly, which can increase your chances of being approved for credit in the future.

The Long-Term Benefits of a Good Credit History

Building a good credit history takes time, but the benefits are worth it. A good credit history can help you get approved for credit, secure lower interest rates, and even make it easier to rent a flat or get a mobile phone contract. So, it’s worth putting in the effort to build and maintain a good credit history.

Improving your credit score is a journey that requires time, patience, and responsible financial behaviour. However, with the right approach and tools like internet banking and tools like Experian Boost, you can make significant strides towards achieving a better credit score. Remember, a good credit score can open up a world of financial opportunities, so it’s worth putting in the effort to improve it.

A man watering his plant leading to a credit score.

Our Experts Comment on Improving Your Credit Score

Financial Expert Andrew Hagger.

I want to emphasise the importance of being patient when working to improve your credit score. Building a solid credit history takes time and persistence. Making consistent, on-time payments and maintaining a low credit utilization ratio are key. It’s also essential to allow your credit history to lengthen. Avoid quick-fix solutions and scams promising instant credit repair. Remember, improving your credit score is a journey, not a quick fix, but the long-term benefits are worth it.

— Andrew Hagger, at Consolidation Expert.

Consolidation Loans for Those With Poor Credit History, Apply Now With Consolidation Expert

Here at Consolidation Expert, our lending panel may be able to provide help for those with poor credit history. If you’re struggling to improve your credit score, then a debt consolidation loan for bad credit may be the answer. To find out if you’re eligible for a debt consolidation loan for poor credit, apply with Consolidation Expert today.

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Representative 14.8% APR

We are a broker, not a lender.

Representative Example: Borrowing £15,000 over 60 months, repaying £355.28 per month, total repayable £21,316.57.

Total cost of credit £6,316.57.

Interest rate 14.8% (variable).

The lenders on our panel offer loans for 12-360 months, with rates from 4.7% APR to 42.6% APR.

The Representative Example is based on all loans paid out by lenders between 1st Jan 2022 and 31st Dec 2022.