5 min read

How can I improve my credit score?

The world of credit scores can be a confusing place, yet your credit rating can be a very useful way to judge and improve your financial health.

black man in studio with tablet
  • Registering on the electoral roll
  • Paying your bills on time
  • Paying off debt
  • Credit cards can help rebuild a poor credit score
  • Check for mistakes on your file

Credit ratings are used by banks, building societies and other financial institutions to decide whether to lend money to you, or to let you open an account. Each provider will have its own system for judging whether you are the sort of customer it wants. But following some general rules can help you improve your credit score.

What is a credit score?

Your credit score is a number which helps you judge whether you have healthy finances. This is an at-a-glance figure which reflects the financial information held on your credit file.

All of your financial decisions, such as taking out a credit card or mortgage, are documented in your credit file. This includes accounts you may have applied and been declined for, plus details of any missed payments you may have had over the last six years.

Any joint accounts or loans you have will also be covered, plus details of how many times you have applied for other financial products.

Basic information such as name, address and date of birth are also displayed, plus whether you are registered on the electoral roll or have been declared bankrupt in the past. However, student loans and salary information are not recorded on your file.

What is it used for?

Banks want to understand customers’ likely behaviours and ensure they do business with reliable individuals. If your credit file shows you have healthy finances they will be more likely to take you on as a customer.

If you have missed payments and fallen into arrears on multiple occasions, this will be reflected in your credit score and you may find it more difficult to take out new accounts or loans in the future, or you could be charged a higher rate of interest.

It is not just financial products that use credit scoring. For instance when you take out a mobile phone contract your network will check your credit score before it lets you take out the contract.

How do I check my score?

In the UK there are three credit scoring agencies:

  • Callcredit
  • Equifax
  • Experian.

You can get a free credit report from any of these firms by post. You may want to do this before you take a major financial product such as a mortgage or loan. Checking your report will allow you to rectify any mistakes that may be on your file.

There are also free ways of accessing your credit score online. Noddle lets users check their Callcredit score for free while Clearscore will provide free details of your Equifax rating. The MoneySavingExpert Credit Club has details of your Experian score.

Services which charge a monthly subscription to access your information are also available.

What is a good credit score?

What is viewed as a good credit score depends on the financial institution you are applying to. Each bank and building society will have its own set of criteria for it to judge a customer.

However, the higher your credit score, the better. Callcredit ratings is scored out of five, Equifax is scored out of 700 and Experian is scored out of 999.

In general, a Callcredit score of 4 out of 5, Equifax rating of 420 out of 700 or Experian score of 880 out of 999 are considered a good score.

How can I improve my score?

It is wise to ensure your finances are in top shape ahead of applying for any major financial products, such as a mortgage. If you’re aiming to buy your first home, getting your credit score in order is a smart move. Improving your credit score can be a slow process. However, there are a number of steps to follow which could give your rating a boost.

Registering on the electoral roll is a simple, and free, way to boost your score. If you are not registered to vote at your home address then it can be more difficult to verify your identity and thus lower your score.

Paying your bills on time may seem like an obvious way to show your financial responsibility. But if you can demonstrate that you are able to meet your existing financial commitments it is more likely you will be accepted in future.

Checking for mistakes and fraud is a wise move. Errors can be found on people’s credit files and these should be corrected before you apply for a new product. You may also be linked to former partners and want to check how this affects your ongoing score.

If you have very poor credit rating, there are a range of credit cards which can help rebuild your score. However, the rate of interest charged is typically much higher than traditional cards, so be aware of extra charges.

Written by Adam Williams – Financial Journalist


Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decision. The opinions expressed within this blog are those of the author and not necessarily of OneFamily.