A good credit score is not just a number; it's a gateway to financial freedom. It can make the difference between getting that mortgage for your dream home, securing a low-interest loan, or even landing a better job. However, if you're dealing with a less-than-stellar credit score, don't fret. In this blog, we will delve into actionable steps you can take to improve your credit score in the UK.

Understand What Affects Your Credit Score

Before you can improve your credit score, it's essential to understand what goes into it. In the UK, your credit score is affected by several factors:

Payment history
Credit utilisation
Length of credit history
Types of credit accounts
Recent credit inquiries

Check Your Credit Report

Start by obtaining a copy of your credit report from leading credit reference agencies like Experian, Equifax, or TransUnion. By law, you're entitled to one free report each year from each agency. Scrutinise the report for any errors or inconsistencies, as these could negatively impact your score.

Dispute Errors

If you find inaccuracies, dispute them immediately. Providing proof will expedite the process of having the errors corrected, thereby improving your score.

Register on the Electoral Roll

Registering to vote is an easy way to improve your credit score. Lenders and credit reference agencies use the electoral roll to verify your identity and address, which adds legitimacy to your credit profile.

Pay Bills On Time

Your payment history accounts for a significant portion of your credit score. Consistently paying your bills on time is one of the most effective ways to improve it. This includes utilities, credit card bills, and other loans. If you're prone to forgetfulness, consider setting up Direct Debits to automate payments.

Manage Credit Utilisation

Credit utilisation refers to the ratio of your current credit card balance to your credit limit. A lower ratio is viewed favourably by lenders. If you have multiple credit cards, consider spreading the expenditure across them to maintain a lower ratio.

Build Credit History

If you're new to credit or have a sparse credit history, consider opening a credit account to build it. Credit-builder cards are designed for this purpose. Use the card for small purchases and pay the balance in full each month.

Diversify Types of Credit

Having a mix of credit types, such as credit cards, retail accounts, and loans, can positively impact your credit score. However, only open new accounts when necessary, as each application results in a hard inquiry, which can temporarily lower your score.

Limit Credit Applications

Each time you apply for credit, a hard inquiry is made on your report. Multiple applications within a short period may signal to lenders that you're in financial distress, negatively affecting your credit score.

Close Unused Credit Accounts

If you have credit accounts that you no longer use, consider closing them. Having too much available credit, even if unused, can be viewed as a risk by lenders.

Seek Professional Help

If you're struggling to manage your debt, consider seeking advice from a financial advisor or a debt counselling service. They can help you set up a manageable repayment plan and may negotiate with your creditors on your behalf.

Final Thoughts

Improving your credit score in the UK isn't an overnight process, but with commitment and the right strategies, you can build a robust credit profile. Start by reviewing your credit report, make timely payments, and manage your existing credit wisely. Your future financial self will thank you.

By following these steps diligently, you'll be on the road to not just improving your credit score but also to a more secure financial future.

Approved by In Partnership FRN 192638 November 2023

How to improve your credit score