Improve your Credit Score

5 Best Tips to Improve Your Credit Score

Ever find yourself scratching your head, wondering how to boost your credit score?

Not sure where to even begin?

You’re not alone, and the good news is - you’re in the right place.

Your credit score might seem like a mystery, but it doesn’t have to be. Today, I’m here to break it down for you.

We’ll cover what a credit score actually is, why it’s so important, and then dive into the five best ways you can start improving your credit score right now. .

What is a Credit Score and Why is it Important?

A credit score is a number that represents your creditworthiness—the likelihood that you'll repay borrowed money on time.

In the UK, this score typically ranges from 300 to 999, depending on the credit reference agency (CRA) you use, like Experian, Equifax, or TransUnion.

Why does your credit score matter?

Well, this number plays a pivotal role in your financial life.

A higher credit score means you're more likely to be approved for credit cards, loans, mortgages, and even things like mobile contracts.

It can also influence the interest rates you're offered, potentially saving you a lot of money in the long run. Essentially, the better your score, the better your financial opportunities.

Top 5 Tips to Improve Your Credit Score

Now that we’ve covered what a credit score is and why it’s important, let’s get into the actionable steps you can take to boost your score.

Tip #1 - Register to Vote

Let’s break it down:

The first and easiest tip, is registering to vote.

When you’re on the electoral roll, lenders can easily verify your identity and address, which adds a layer of trust to your profile.

If you’re not registered, lenders may be hesitant to approve your credit applications because they can’t confirm your details.

How to do it: If you haven’t already, register on the electoral roll at your current address. You can do this even if you’re in shared accommodation or living with your parents. It’s quick, easy, and can make a big difference to your credit score.

Click here to register and learn more

Tip #2 - Make Regular Payments on Time

Paying your bills on time is crucial.

Your payment history accounts for a significant portion of your credit score. Late or missed payments can seriously harm your credit score, while a history of on-time payments will improve it.

Tip: Set up direct debits or standing orders for your bills to ensure you never miss a payment. If you’re struggling to keep up, consider speaking to your lender about arranging a more manageable repayment plan.

"Paying your accounts regularly and on time will improve your score as you build a credit history." Experian

Tip #3 - Keep Your Credit Utilisation Low

Credit utilisation is the percentage of your available credit that you’re using.

For instance, if you have a credit card limit of £2,000 and you’ve used £1,000, your credit utilisation is 50%. Generally, it’s best to keep this figure below 30% to maintain a healthy credit score.

Why does this matter? High credit utilisation can signal to lenders that you’re overly reliant on credit, which might make them less likely to lend to you.

Tip #4 - Avoid Multiple Credit Applications

Applying for several credit lines in a short space of time can be detrimental to your credit score.

Each time you apply for credit, it leaves a mark on your credit report. If you make too many applications in quick succession, it can make you look desperate for credit, which is a red flag for lenders.

What to do instead: When shopping around for credit, ask lenders for a ‘quotation search’ rather than a full ‘credit application search.’ Quotation searches don’t affect your credit score, whereas credit application searches do.

Tip #5 - Check Your Credit Report for Errors

Mistakes on your credit report are more common than you might think and can negatively impact your score.

It could be something as simple as a mistyped address or a more significant error like an incorrect late payment entry. Regularly checking your credit report allows you to spot and rectify these errors promptly.

How to fix it: If you find an error, contact the credit reference agency and the lender in question to have it corrected. You can also add a "Notice of Correction" to explain any negative marks that occurred due to special circumstances, like illness or job loss.

Pouch's Final Thoughts

Improving your credit score doesn’t have to be overwhelming.

By registering to vote, paying bills on time, keeping your credit utilisation low, avoiding multiple credit applications, and regularly checking your credit report for errors, you’ll be well on your way to a healthier financial future.

Remember, small steps can make a big difference. Start today, and watch your credit score climb!

Bonus: Discover how Pouch is transforming the way people approach viewing their financial health. Click to know more!