How to improve your credit score

Whether you're looking to get a mortgage, loan or credit card, a good credit score is likely to increase your chances of being accepted as well as get a lower interest rate.

Here are some tips to make sure you’re moving in the right direction.

Register to vote

Get yourself on the electoral register as lenders will use this to check your name, address and where you've lived before. Lenders need to confirm these details to validate who you are before offering credit. So if you're not registered it could cause a delay or result in your application being turned down.

Have regular check-ups

Check your report to make sure there are no mistakes and any amounts showing as owed on your accounts are correct. You can get a copy of your credit report from companies such as TransUnion, Experian or Equifax.

Cancel any credit cards you don't use

Banks will look at the amount you could potentially borrow as part of their assessment. If you have a credit limit of £3,000 on a new, unused credit card, lenders may believe that you might spend it all at once. If you're deciding which credit cards to cancel, it’s better to cancel a newly opened credit card than one you've had for a long time with a good history.

Rebuild your credit

If you want to build up your credit history, taking out a small amount of credit could help as long as you manage it well.

An arranged overdraft or credit building credit card with a low limit can be easier to get accepted for than a credit card. Having one can show lenders that you're able to make payments on time and stay within credit limits. If you take out a credit card, try to limit your spending and repay the balance in full every month - that way you'll avoid paying interest.

Pay on time

Show lenders that you're a responsible borrower by always paying your bills on time. Lenders want to know they can rely on you to make regular payments. A missed payment is likely to negatively affect your credit score so be sure to keep on top of your payments. Your payment history in the last 12 months will be most important to lenders. If you've missed payments in the past, but have since become more reliable, your credit score might not be affected as much as you might think.

Avoid multiple applications

Too many applications could indicate that you're struggling for money. If you just want to compare rates, ask your lender to do a 'quotation search' instead of a 'credit application search'.

Stay within your limits

Spending near or over your credit limit every month is going to give the impression that you're struggling to manage your finances. 

Don't withdraw cash on your credit card

Repeatedly withdrawing cash on your credit card could affect your credit score. It suggests you're unable to get money from elsewhere. And it can also be expensive as you'll usually pay a cash withdrawal fee and a higher rate of interest if you use your credit card in this way.

Don't use credit repair companies

Credit repair companies can be expensive and they're not able to do anything you can't do yourself, often for free. There are plenty of good things you can do improve your credit score, but it will take time.