Your credit score isn’t just a number; it’s a key player in your financial game, affecting everything from getting that dream home, replacing the car to the latest mobile phone contract. All these lenders and others will check your score to assess your creditworthiness.
Once you understand the factors affecting your credit score, you’re already on the path to making decisions that may open doors to a stable financial future.
So, whether you’re planning a big purchase or want to keep your finances in tip-top shape, boosting your credit rating could unlock a new world of possibilities for you.
We are dedicated to helping you take control of your financial journey, and a key part of that is understanding how to elevate your credit score.
Let’s explore the essential steps to boost your credit score and keep it climbing in the right direction.
The first step is checking your credit history. There are three main credit reference agencies (CRA). This is FREE, no need to pay for it.
Equifax https://www.clearscore.com/
Experian https://www.experian.co.uk/consumer/experian-account.html
Transunion https://www.creditkarma.co.uk/
Check with your bank, sometimes they will include a credit checking service as part of the current account.
Read more at the government MoneyHelper website https://www.moneyhelper.org.uk/en/everyday-money/credit/how-to-check-your-credit-report
Martin Lewis’ MoneySavingExpert also has a section on your credit history https://www.moneysavingexpert.com/loans/check-free-credit-report/
We all have a credit score, even if you’ve never borrowed. The score varies for each CRA, but basically the higher the number, the more trustworthy they think you are. Lenders and other organisations will share data with the CRAs, who build up a picture of how much you owe, if you’re keeping up with payments, what loans, credit cards and other debts you may have or settled within the last six years. They also check if you are registered to vote (indicating an established citizen), how long you’ve been at your current address and previous addresses, if there are loan defaults, county court judgements, how many loans applied for and some other factors.
Lenders want to know that you are stable, settled, in control of your finances and that you will repay their loan in accordance with the loan agreement. A low score indicates that you might not repay on time and they may charge a higher interest rate or may not lend at all.
So repaying your credit union loan on time can be important to help build up a positive credit history. Understanding these factors empowers you to take control of your credit score and make it better, paving the way to financial stability and success.
Find out your Credit Score HereGiven that your payment history significantly impacts your credit score, paying at least the minimum on your bills before they’re due is crucial to keeping your score healthy.
It is free and provides some evidence that you are settled and responsible member of society. Plus as an added bonus, you can have a say on how our country and local councils are run! https://www.gov.uk/register-to-vote
Aim to use no more than 30% of your credit limit. Consistently chipping away at your balances will gradually raise your score over time.
If you’ve got old credit accounts you’re not using, it’s wise to keep them open, especially if there’s no annual fee. A more extended credit history can give your score a nice boost.
Credit types (e.g., credit cards, instalment loans, mortgages) can improve your credit score. However, it would be best to take on new credit only when it makes sense.
If possible, wait one month between applying for multiple new credit accounts. This will significantly decrease the impact on your credit score.
Sometimes mistakes are made, so do review your credit reports (see above for how to Find your credit report for free) to catch any mistakes or inaccuracies that might lower your score. If you spot any errors, dispute them so that the information appears on your report.
Would you ever think that your everyday habits could affect your credit score?
Smart budgeting helps you avoid overspending while clearing unnecessary debt and keeps your balances in check.
Setting up automatic payments can save you from late fees, and building an emergency fund means you won’t have to lean on credit in a pinch.
All these little choices add up to a healthier credit score over time!
Some factors could lead to a drop in your credit score, with some reasons being more apparent than others.
Keeping your credit score in great shape isn’t just something to be proud of—it’s your ticket to fantastic financial perks.
Lower interest rates, easier approvals for apartments, mortgages, or jobs, and more muscle when negotiating loan terms.
A healthy credit score sets you up for success and gives you the confidence to pursue your dreams and goals.
