How to Improve Your Credit Rating and Score

A strong credit rating can bring with it significant financial benefits, improving your chances to secure loans, mortgages and other forms of credit with favourable terms and levels of interest.

For those with a low credit rating, here we look at how that score is arrived at and how it can be improved in the short term and the long term.

What Affects your Credit Rating?

  • High levels of debt. Banks and credit lenders may be concerned about lending you money if they believe you are financially over-stretched.
  • Missing payments or making late payments. Missed mortgage, credit card, personal loan or utility bill payments remain on your credit file for six years.
  • County Court Judgement (CCJ). Receiving a CCJ will seriously impact your credit score and stay on your credit file for six years.
  • Applying for credit from multiple sources simultaneously. Simply applying for credit appears on your credit report, so it is better to stagger applications and enquiries. Lenders may be concerned if they see you have applied for credit from multiple sources.
  • Possessing inactive credit cards. Lenders look at the amount of credit available to you and not just the credit you are using.
  • Inclusion on the electoral register. Lenders will use this to confirm your identity.
  • Moving home. Lenders often feel more comfortable when they see evidence you have resided at one property for a significant amount of time.
  • Financial association. If you have entered into a joint account with somebody with a poor credit rating, your own credit rating may suffer a knock-on effect.

Take a look at our article about how debt management may affect your credit rating.

How to Check Your Credit Rating

If you are unaware of your credit rating, there are a number of services from which you can get this information at a cost of £2. The following websites can help you check your credit score.

As well as checking your score, a credit file check can help you identify any mistakes which may be included. If you spot any mistakes, make a complaint to the credit reference agency and they will have 28 days to respond. They will either remove the misinformation or challenge your complaint.

You can also add ‘notice of correction’ to any information on your credit file which does not accurately reflect your current situation. This can add clarification for lenders looking at your file.

Improving Credit Rating

If you have checked your score and are not satisfied with it, or believe that it could have a negative effect upon your ability to secure lending – there are a few techniques which can be implemented to improve credit rating.

  • Stop applying for credit. Until you have optimised your credit file – additional applications could have detrimental effect upon your credit score.
  • Sign up to electoral register. This will help any lenders correctly identify you.
  • Cancel unused credit cards. This will demonstrate you are serious in application for cards in the future.

For expert advice about coping with debt, visit the InControl homepage or call our dedicated team on 0800 072 6623.