How to Improve Your Credit Score
Your credit score can be affected by a lot of things in your life, from credit cards to payday loans, and even mobile phone contracts and not being able to pay your energy bills.
It is important that you try and keep your credit score as high and healthy as possible. After all, a good credit score will make you more likely to be accepted for any type of credit, and the higher your score is, the better interest rates you’ll be offered!
A poor credit score can leave you in some tight situations, where you may need to rely on bad credit loans if and when you do need to borrow some money.
There are many ways for you to improve your credit score. Most of these are obvious really, like – paying your bills on time, not defaulting on payments, etc. We know that this is, in practice, sometimes much easier said than done, so here we’ll be looking at certain areas you might be able to use to improve your credit score.
Ways to Build Your Credit Score:
The Electoral Roll –
Perhaps the most unusual, and in some cases the quickest way of improving your credit report, is by ensuring that you are on the electoral roll. If you haven’t already, you should make sure that you’re registered to vote.
Aside from allowing you to engage with the UKs political voting system, registering yourself to vote allows credit reference agencies to access and verify further information, as such your name, age and address.
Creditors will see this information, and can use it to accurately prove whether any application you make is fraudulent or genuine, and it can be used to check if your information is a match. Lenders are also more likely to approve an application if they can see that you’re listed on the voting system.
By joining the electoral roll, you can save time on the majority of credit applications, as certain lenders will require less physical proof of identity.
Just a side note: many people move house, and forget to re-register. You MUST register any change of address to benefit from being part of the electoral roll.
Don’t Close Old Accounts –
Another underappreciated method of boosting that credit score is keeping your old unused credit cards active!
Your credit score is composed of multiple different factors – not just whether you make your payments on time. In fact, one of the biggest impacts on your credit file is utilisation, which is essentially how much of your available credit you use.
When you close any older and unused credit cards, you’re effectively decreasing your available credit. This will, in turn, increase your utilisation, as you will be shown to have used a higher percentage of your available credit.
It is not recommended to open any new cards in an effort to improve your credit, as you may be subject to a hard credit check, and rejections will affect your credit file in a negative way.
Make On-Time Payments Every Month –
A further misconception by those of us who pay off credit cards is that paying the minimum payment each month, by the due date, is sufficient enough to maintain a good credit score. Actually, by paying your total due balance each month is the proven method to being the best way to improve your score.
Understandably, some of us do have a higher utilisation rate, and it isn’t always possible to keep your balance below the recommended 30% threshold. In this scenario, making more than one payment to your credit card or loan each month can improve your credit history, as it shows a willingness to reduce the balance.
Try Not to Switch Lenders –
It may sound like a great idea to switch lenders – you might have been offered an irresistible introductory rate or balance transfer deal. However, this is not just completely made to help you make more regular payments, it’s for a business to attract new customers, and ultimately make more money.
By switching credit card providers or acting on a a balance transfer will essentially trigger another hard credit check. For example, if you’ve only taken out the initial credit agreement in the last year or so, and then you apply for another when you’ve been struggling to meet repayments, it will only impact your credit score in a negative manner.
In actuality, one thing that reference agencies will look at is how long you’ve held an individual credit agreement for. Loyalty really does pay off, so if you can, it’s worth staying with the same provider(s) you’re already with, rather than balance transferring or switching away and closing your account.
How to Improve Credit Score in 30 Days:
Improving your credit score in just 30 days might be a bit of a challenging, as it typically takes time to see significant improvements. However, there are some steps you can take to potentially raise your credit score in a short amount of time. Here are some tips:
- Check your credit reports for errors – Errors on your credit reports can negatively impact your score. Checking your credit reports regularly can help you identify and dispute any errors.
- Request a good-will removal from your creditors – defaults obviously show negatively on your credit history, so take a shot and ask the lender to remove it. It isn’t guaranteed, but if you plead your case, for instance, your tenure loyalty to the company, they might honour it and it’ll massively improve your rating.
- Clear those small balances as soon as you can.
- Increase your limit – and DO NOT use it!
How Quickly Does a Credit Score Raise?
The speed at which your credit score raises will vary based on a number of factors, including the your credit history, the types of credit accounts you have, and your payment history. Generally, positive changes in a credit score can be seen within a few months of making responsible credit choices.
It’s important to note that building and maintaining a good credit score is a long-term process that requires a consistent/responsible credit behavior. Consistently practicing good credit habits over time can help increase your credit score and lead to better financial opportunities.