How to improve your credit score

Everyone should make time to check and manage their credit score, as it can affect your ability to borrow money or access products such as credit cards, or loans. You can check your score for free and if it isn’t in the best shape, there are things you can do to improve it. We’ll show you some free ways to improve your credit score today.

What is a Credit score?

Your credit score is a number that shows how you manage finances and gives lenders an indication of whether or not you’ll be able to pay the money back.

It’s created from information held in your credit report, also known as your credit file.

The information on your credit file, application and any information on how you managed past accounts if you’ve borrowed from the lender before, will be used to decide:

  • Whether to lend to you
  • How much to let you borrow
  • How much interest to charge you

The most recent information on your file is the most important, as lenders are most interested in your current situation.

If your credit report shows a few missed payments, you might be charged higher interest by lenders or might not be eligible for some loans.

This is because lenders believe they might be taking a higher risk when lending to you.

Your credit history can affect your ability to get things such as: insurance or mobile contracts.

Regularly checking your report is a great idea, as it can help you spot any fraudulent activity or mistakes on your report.

How to check my Credit score?

There are three main credit scoring agencies in the UK.

Each charge to access their services, although it’s possible to access for free through their partner site.

Credit scoring agency Access your score for free with
Equifax Clear score
Experian MSEs Credit club
Callcredit Noddleopens in new window

Clear score, MSE, Credit Club and Noddle provide the same detail as in your full credit report; although there can be about a two-month delay in information being updated on the free sites.

These credit agencies are likely to market a variety of loans to you, which is partly how they’re able to operate for free.

If you’re looking to borrow money, it’s best to shop around for the best deals before accepting borrowing offered through these sites, as cheaper loans might be available elsewhere.

Credit score membership

A subscription membership with one of the main credit agencies, can allow you to gain more information on your credit history.

Some of the memberships on offer give you access to agents, who can look into your file.

But remember to set up a reminder to cancel the membership before it starts to cost you too much.

Full statutory credit report

You have the legal right to see a copy of your credit report for £2.

You can request this from any of the agencies above, all three agencies might hold slightly different information on you.

Your statutory report will give you the most up-to-date information.

What information is in a credit report?

Each agency holds slightly different information about you, so it’s worth checking all three for a more accurate picture.

In general, your file will include:

  • Name, address and date of birth
  • Any search footprints on your file
  • Your financial links to other people
  • Any late/missed payments or defaults
  • How much money you owe to lenders
  • Any County Court Judgments (CCJs) against you
  • If you’re on the electoral register at your current address
  • If you have been declared bankrupt or entered an IVA (Individual Voluntary Arrangement).

It won’t include the following information:

  • Your salary
  • Student loans
  • Medical history
  • Criminal record
  • Council tax arrears
  • Parking or driving fines
  • The amount of money in your current and savings accounts

However, you might be asked for this information when applying for a loan or contract.

They might then choose to use this information alongside your credit report to assess you.

What is a good credit score?

Different lenders have their own standards for rating credit scores.

However, if you have a good score with one of the main credit reporting agencies, it’s more than likely you’ll have a good credit score with your lender.

A good credit score with:

  • Call Credit is scoring 4 out of 5
  • Equifax is scoring over 420 out of 700
  • Experian is scoring over 880 out of 999

But remember: your credit score doesn’t guarantee that you’ll be approved for credit or offered the lowest interest rates.

This is because a lender’s decision is not made solely on score.

MSE’s Credit Club shows your chances of getting accepted for a card or a loan without it impacting your credit report.

So, if you’re looking for a card or loan and want to avoid applying for and getting rejected, it’s a good place to start your search.

How long will it take to improve my credit score?

In general, credit history is built up slowly over time as you increase the number of on-time payments you make.

The longer the bill goes unpaid, the greater the likely impact on your credit score. Keep a close eye on your credit score to help spot issues.

After six years, most negative marks on file, such as late payments and CCJs will be removed from your credit report.

However, there are some quick improvements in the next section, that you can make today to begin raising your credit rating.

How can I improve my credit score?

If you’re not sure where to start MSE’s Credit Club provides personalised suggestions based on its analysis of your score.

If you have a low credit rating, rest assured there are several things you can do to start improving your score today:

  • Register on the electoral roll: if your name’s not on there, you’ll find it much harder to get credit. You can register to vote online or by post.
  • Check for mistakes on your file: even having just a slightly wrong address can have an impact on your score. So, make sure you check all the details and report any incorrect information immediately.
  • Create signs of stability: opening and paying on time a phone landline or internet contract, is a great way to prove to lenders that you’re capable to managing finances effectively.
  • Close unused credit card accounts: to improve your chances of securing a loan or credit. If you already have open accounts with high credit limits that you no longer use, future lenders might view you as high risk.
  • Check if you are linked to another person: as having a spouse, friend or family member’s credit rating linked to yours through a joint account, could affect your personal rating if they have a poor score.
  • Check for fraudulent activity: if something on your credit report is incorrect or doesn’t apply to you – i.e. if someone applied for credit in your name without your knowledge, contact the credit reference agency immediately to have your file updated.
  • County Court Judgements (CCJs): receiving any court judgements for debt, will have a serious impact on your credit score. If you’re having problems keeping up with payments, seek debt advice.
  • High levels of existing debt: eliminate any outstanding debt before applying for new credit. As banks, building societies and credit card companies might be hesitant about lending you more if you already have a lot of existing debt.
  • Moving home a lot: lenders feel more comfortable if they see evidence that you have lived at one address for a considerable period. Be sure to bear this in mind.

If you’re struggling to improve your score, it might be worth considering signing up to a one month free trial membership offered by the main credit agencies.

Consider getting a Credit-building card

If you have a poor credit history, there are credit-builder credit cards you can apply for.

Beware that the interest rates charged are much higher than standard credit cards.

Typically, you’ll be paying over 30% in interest a year, so you must make sure that you pay off any balance in full each month, if possible.

Otherwise you could run the risk of getting debt that you might struggle to get out of. Damaging your credit score even further.

Credit limits on these types of cards are typically low.

Prepaid Cards

Some prepaid cards have a credit-building option that can improve your credit score.

How it works is that the prepaid card company ‘loans’ you an amount, usually £60.

You sign a credit agreement and agree to pay the card company a monthly fee. For example, £5 a month to repay your £60 ‘loan’.

At the end of the year, this will be recorded on your credit report as 12 months of successful repayments, if you haven’t missed any fee payments.

Bear in mind that all prepaid cards charge fees.

Read our guide for more information on Prepaid cards.

Avoid expensive credit repair companies

There’s no reason you can’t improve your credit rating yourself, so don’t pay someone else to do it.

You might see adverts from firms that claim to repair your credit score.

Others claim to be able to do things that legally, they cannot, and some might even encourage you to lie to the credit reference agencies.

Try and consider every possible option before using such firms.

How to report and fix any mistakes on your file

If you spot any mistakes on your credit history report, you can challenge them by reporting it to the credit reference agency.

They have 28 days to remove the information or tell you why they don’t agree with you.

During this time, the ‘mistake’ will be marked as ‘disputed information’ and lenders aren’t legally allowed to consider it when looking at your credit file.

If there’s information on your file that’s accurate but doesn’t reflect your current situation, contact the credit agency to get it updated.

For example, you had previously got into debt problems when you lost your job but are now back in employment, you can add a ‘notice of correction’ to your report.

Checking your file regularly has no impact on your credit score and can help you to improve it.

Find out more on correcting personal information on your file on the Information Commissioner’s Office website.

Students and young borrowers

You might think that the strongest credit report would be one showing only your personal information with no record of any borrowing or missed payments.

However, having no credit history can be as bad as having a poor credit history.

This is because lenders don’t have any historical information about how you manage your money, making it harder to assess your level of risk.

Missing payments for your phone bill or utility payments will affect your credit score, however there are some things that won’t, such as:

  • The previous occupants of your address
  • Just because you live with someone doesn’t mean you’re linked
  • Student loan repayments (except for students who started university before 1998 under the original loans system and defaulted)

However, you should be able to build up a good credit score if you show you that you’re managing your money well when you apply for and use credit.

Read our guide to Managing your credit card account.

Why should I care about my Credit score now?

Having a good credit rating can be crucial if you ever want to apply for things such as:

  • Buying a home
  • Landing your dream job
  • Getting a mobile phone contract

So, the key is to get started on improving your credit score sooner, rather than later.

As a good credit score, will benefit you in countless ways throughout your life.

For example, if you’re applying for a student bank account, your credit report will impact the amount of interest-free overdraft available to you.

Or if you decide to apply for a student credit card, lenders will use your credit report to decide a suitable credit limit for you.

You might stay registered to vote at:

  • Your family home
  • As a student at a different term-time address

When you apply for for credit, lenders will check your name and address against the electoral roll, so it’s important to register to vote as it can help boost your score.

If you got rejected it’s best to check you score as if you continue to get rejected, your score could go down.

Where can I find more information?

For additional help and advice on ways to improve your credit score and chance of borrowing:

  • Visit the Which? to increase your chances of being accepted for credit.
  • Visit the Moneysavingexpert for advice on increasing your credit rating.

Did you find this guide helpful?