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How To Improve Your Credit Score In The UK

A man is shown checking his credit score online and making plans to improve his credit rating

Your credit score can have an impact on many aspects of your life, especially when you seek financial services. In this article, we shall discuss:

  • What a credit score is
  • What can affect your credit rating
  • How you can improve your credit score
  • How a good credit rating may help you

What is a good credit score?

Your credit score is a figure derived from your credit report. The information on your credit report impacts a lender’s decision to approve you for a loan, how much they could potentially lend to you, and how much interest to charge. A credit score is a three-digit number that represents the risk that you present a lender with when you apply for a loan with them.

A credit score is a figure that represents the risk that you carry when borrowing

As your current financial situation carries the most weight, the most recent information on your credit file is the most important. To find out your credit rating, you may wish to use one of the three main credit rating agencies that operate in the UK: Experian, Equifax, or TransUnion. Some of these agencies provide their services entirely for free, while others may charge a fee to give you full access to your credit report.

What affects your credit score

If you missed making payments, this would likely affect the decision of a lender to approve a loan for you, and if they did, they would likely charge a high interest rate because of the higher risk involved.

A woman is shown making credit applications on her laptop at home

However, there are many aspects that may affect your credit score standing — the most common practice that can affect a credit rating, which is also one that many overlook, is making too many applications for credit with high frequency. When you apply for credit, the lender must perform a ‘hard check’ on your credit rating, and having too many checks like this will affect your ability to borrow. Fortunately, there are ways to find your eligibility for credit online before proceeding with an application.

Improving your credit score

Improving your credit score can be crucial when you decide to take on a large loan. Therefore, it is critical to ensure that you are getting not only approved for the loan that you apply for but that you are also offered a competitive rate. There are many ways to improve your credit score which we discuss below.

As your current financial situation carries the most weight, the most recent information on your credit file is the most important.

Ensure you are registered on the electoral roll since not being listed can affect your credit rating. When checking your credit report, ensure that there no mistakes on your credit file. If you spot any errors, proceed to report these so that they may be amended as soon as possible. Most importantly, to improve your credit score and keep it high, pay your bills in a timely manner. Additionally, be aware that if you have any joint accounts with someone else, their credit score could affect yours.

Further factors you need to be aware of if you wish to improve your credit score are any fraudulent activities on your credit report, or County Court Judgements for debt. Make sure to seek debt help if you are unable to make payments on time to protect your credit rating. High levels of debt may also affect your ability to be approved for credit, as would moving houses frequently. Lenders may feel that you are more trustworthy when living at a single address for an extended period.

An employer checks their employee's credit score to determine their financial responsibility

Even if you have little credit history or a bad credit score, there are financial products that can help you. A credit-building credit card is designed for people with a poor credit rating and usually offer high interest rates. However, with this type of credit card, you could build up your credit rating by making your monthly payments in a timely manner and in full. Because of the high interest rates, however, it is essential to stay on top of your repayments and avoid any debt problems.

How an improved credit score can help you

The importance of an excellent credit score cannot be understated. A number of financial services and aspects of every life, including employers, insurers, and lenders, rely on the standing of your credit rating to determine your responsibility and how ethical you act. An insurer views someone with a good credit score as trustworthy and much less likely to commit financial fraud. A lender relies on someone’s credit rating to ensure that they have been able and willing to repay loans on time and therefore determines that they are not a substantial financial risk. Employers may sometimes run a credit check to assess the responsibility levels of an employee.

A bad credit score, on the other hand, can prevent you from being able to take out a mortgage, getting employed in certain lines of work, and generally prevent you from accessing a range of financial products and services. Even in the cases that a bad credit rating grants access to limited credit options, these are typically offered at high interest rates.

Common questions about credit scores

What is a good credit score?
A good credit score, as a figure, very much depends on the individual credit reference agencies. TransUnion marks a 4 out of 5 score as good, Equifax scores anything over 420 out of 700 as good, and finally, Experian marks over 880 out of 999 as a good credit rating. However, it is essential to keep in mind that even with a good credit score, you are not guaranteed access to all financial products as lenders may look at more factors than just your credit rating.
What is a bad credit score?
Credit scores vary from one credit reference agency to another, but a figure usually reflects a bad credit score just above the middle of the scale that each agency uses and below that. For instance, Experian marks a rating as poor at 561-720 out of 999 and very poor at 0-560 out of 999. Bear in mind that with a poor or very poor credit rating it is very challenging to find lenders with whom you can deal; however, you may be able to improve your credit score using a credit builder credit card.
How can I check my credit score?
You may use any of the three major credit reference agencies that operate in the UK to request a credit report online. These agencies are Experian, Equifax, and TransUnion (formerly CallCredit). While part of their services may be free, such as providing you with your credit rating number, giving you access to your full credit report can be an extra service for which these agencies will charge.
What credit score is necessary to buy a house?
The credit score that you need to buy a house will vary from lender to lender. The most crucial thing is that, if you are eligible for a mortgage, your credit score will affect the size of your down-payment and the interest charged.
How long does it take to improve my credit score?
Building up your credit score is a relatively slow process. As you increase the number of your on-time payments, your credit rating will follow suit. Usually, negative marks remain on your credit file for up to 6 years, a period after which all your history is entirely deleted from your credit report.
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About the author

Thomas Henderson

Thomas worked as a consultant in personal finance in the UK for 18 years. He has found a passion in sharing his experience on familymoney.co.uk

Thomas also takes pleasure in woodworking, reading and observing stock market trends.

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About The Author

Thomas Henderson

Thomas worked as a consultant in personal finance in the UK for 18 years. He has found a passion in sharing his experience on familymoney.co.uk

Thomas also takes pleasure in woodworking, reading and observing stock market trends.

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