Most financial services will have you think that credit scores are a mystery, when in fact we know quite a lot about how they’re calculated. If you want a longer overview on what a credit score is, why it’s important, and who creates your credit score then read our Credit Scores 101 guide. For ways to improve your score, read on!
The first step of course is to find out what your score is. The most widely used score in the market is created by Experian and you can see your Experian Credit Score for free on their website. Experian also has the most useful tool I’ve found that gives you specific actions to improve your score - this is the Experian Credit Expert. It’s worth signing up for the 30-day trial and see all the specifics of YOUR score and where you can improve it and how much exactly your score will improve by. There’s no need to keep paying after the free trial, £14.95 per month is a steep price imo. Alternatively you can use the Clearscore app, which provides a free monthly credit report and ways to improve it at the cost of getting some loan and credit card deals sent your way. Clearscore shows you the Equifax credit score, which is the second largest provider in the UK. You'll find some differences between your scores in different providers, but they all use the same data.
The main things that everyone should be doing are:
1. Register on the electoral roll:
It takes 2 minutes by verifying your address and it’s a significant booster to your score. You can do it on the UK gov website.
2. Pay things on time and regularly.
Use Direct Debit to pay your subscriptions or recurring payments: pay things like your water bill, electricity, council tax, or mobile/internet via direct debit. Regular payments are very good for your score.
3. Get a credit card:
It’s important to build your credit history and having little or no credit history can make it difficult for companies to assess you, and your credit score may be lower as a result.
4. Keep your credit utilisation low.
Your credit utilisation is the percentage you use of your credit limit. For example, if you have a limit of £2,000 and you’ve used £1,000 of that, your credit utilisation is 50%. Usually, a lower percentage will be seen positively by companies, and will increase your score as a result. If possible, try and keep your credit utilisation at 25%.
If you've been doing all of this already, there are some new ways or hacks that can also boost your score higher:
1. Use your rent payments to build your credit.
Your rent shows consistent monthly payments and is a great way to build up your score. Use a free service like CreditLadder to have your rent reported to credit agencies.
2. Get a second or third credit card
Provided you have self-control and won’t be spending on it, getting an additional credit card will increase your overall limit, but if you only make minimal payments on it you’ll be boosting your score.
3. Try Experian boost
Experian Boost uses open banking and can help you increase your credit score simply by sharing how you manage your money. Its free and it only entails securely connecting your bank account. Experian will look for subscriptions like Spotify, Netflix that show regular payments.
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