|Improve My Credit Score|
Getting declined for credit cards? Being offered rates much higher than the "typical" ones advertised by loan companies? Struggling to secure a mortgage? If so, you could have a problem with your credit score (also referred to as your credit rating).
The good news is, there's no problem that can't be solved by following our simple 10 Step Plan to Improve Your Credit Score.
Step 1 - Find Out What the Problem Is
Order your free credit report and credit score to find the root cause. You can use our Credit Report Comparison to see which credit reference agency offers the best credit report for your needs. Or if you already know which one to go for, use the relevant button to order your free credit report now:
Remember, checking your own credit report doesn't lower your credit rating.
Step 2 - Correct Any Inaccuracies
Let's face it, lenders do make mistakes. If there's anything on your credit report that's incorrect or that you don't agree with, contact the relevant lender and ask them to amend or remove it. Incorrect information can give you a bad credit rating and affect your credit history.
Also, if you see an application that you didn't make, notify the lender immediately as you could be a victim of identity theft. Remember to check your credit report regularly to make sure it's always up-to-date and correct and to make sure fraudsters aren't trying to take out credit in your name.
Step 3 - Make Sure Any Financial Associations are Correct
If you have a joint bank account, mortgage or credit card with someone else, for example your spouse, you have a "financial association" which will be recorded on your credit report. When you apply for credit, a creditor may also search your associate's credit file to find out whether it's likely their financial situation could have an affect on your ability to keep up with payments. If one of your associates has a low credit score or a poor credit history, it could affect your ability to obtain credit.
If you are separated or divorced, you should also separate your finances. To do this, contact your creditors to update them, and also write to the three UK credit reporting agencies, Experian, Equifax and Call Credit and ask for a notice of disassociation.
Step 4 - Register on the Electoral Roll
If you're eligible to vote, make sure you're registered on the electoral roll at your current address. Lenders use the electoral roll to verify who you are and where you live. You can lose valuable points if you're not registered at your home address. Remember to register as soon as possible after you've moved to a new address. To find out how to register please click here.
Step 5 - Don't Have Too Many Credit Searches Done
Every time you apply to a lender for credit, you're giving them permission to search your credit file, also known as a credit search. Each credit search is recorded on your credit report for subsequent lenders to see. Too many credit searches can be seen as a sign that you are desperate for credit, that you're attempting fraud, or that you're a prime candidate for over-borrowing and getting into debt. This could lead to your application being declined.
Try to keep your credit searches to a minimum. If you're getting a quotation and not actually applying for credit, it's now possible for many lenders to do a quotation search which won't show up to other lenders.
If you have credit searches on your report that shouldn’t be there, contact the lender who made the search, and explain that you were just seeking information and not submitting a full application. If they've searched your file without your permission they should amend your credit file.
Step 6 - Keep the Number of Credit Accounts You have to a Minimum
Having too many credit cards or loans, even if you're paying them off on time, can be a problem for some lenders. They may worry that you're getting in over your head. If you have credit cards with no balance, you should cancel as many as possible. Although it may be nice to keep them there for a rainy day, a lender will see a large amount of unused credit which could be utilised at any time in addition to what you're applying to them for.
Step 7 - Make Your Payments On Time
Missed or late payments are frowned upon by lenders. A common mistake that many people make is not having direct debits setup for their credit agreements. This puts the emphasis on you to remember to make the payments on the correct dates and causes you extra work. If for any reason you're unable to make the payment, for example if you're away on holiday, you could be causing yourself an unnecessary problem.
If you miss a payment for any reason, try to catch-up as soon as possible.
Step 8 - Talk to Your Creditors
People fall behind with their payments for many reasons, including redundancy, sickness or family issues. If you're unable to keep up with your payments, discuss the problem with your creditor and if necessary, work out a payment schedule you can meet. Creditors would rather get their money back over a longer period of time than write it off altogether. This could prevent an agreement ending up as a default or County Court Judgment (CCJ).
Step 9 - Always Tell the Truth
If a lender finds out that you've lied on an application, or even bent the truth slightly, they are within their rights to record this on your credit report. After all, this is fraud.
Step 10 - Never Give Up
Remember that, when it comes to your credit score, time is a healer. Even though your credit history may have been poor in the past, many entries disappear from your credit report after six years. By opening new accounts and managing them responsibly, many lenders will see that you could be a good customer. This can also help if you have a very short or even no credit history.
To find out how long entries stay on your credit report, please click here.
Experian, Equifax and CallCredit all offer their own credit scoring services which will give you a good idea of how a lender will rate you. Please click on one of the links below to order your online credit score: