Home Business Insights & Advice How to improve your credit score in 2021

How to improve your credit score in 2021

by John Saunders
27th Aug 21 11:03 am

Your credit score can say a lot about your financial health and can reflect how good you are with managing money, borrowing and repaying loans, and more. It can also be an important indication for whether a lender should approve your loan application, and you can even find yourself having more borrowing options when your credit score is good.

But how exactly do you improve your credit score in 2021? Here, we explore some top ways to boost your score.

Credit builder cards

One effective way to build your credit score is with a credit-builder credit card – which, as the name suggests, is the main purpose of these cards.

As they are helping users to build up their credit score, these cards will often have higher interest rates and lower limits when compared to other types of credit cards. These cards are useful for those who don’t have much of a credit history, known by the CRAs (Credit Referencing Agencies) as having a “thin file”.

Having little to no credit history, much like having a bad credit history, can leave you limited in the financial products available to you, as you aren’t able to show a good history of past borrowing, which is what lenders can use to assess how risky you are to lend money to.

Register to vote

You should be registered to vote at your property, meaning if you move house, you’ll have to update where you’re registered to vote.

Registering to vote can also help to boost your credit score, Experian claiming this could improve your score by 50 points.

It’s a simple thing to do that doesn’t require much effort but can still help you in building up your credit score.

Get your rent payments reported

A common complaint from renters is that making their monthly rent doesn’t help to improve their credit score. However, this isn’t the case, you can now make your rent payments count towards your score.

Private, social housing and council tenants are able to ask their landlord to report their payments to The Rental Exchange, which makes this information appear on renters’ Experian credit reports.

Private renters also have the option to report their rent payments themselves via Canopy (which is then reported to Experian) or CreditLadder (which is then reported to both Experian and Equifax).

Don’t miss payments

One of the most essential aspects of your credit score is your ability to demonstrate you are a responsible borrower, and therefore reliable to lend to. This can be done by showing you can pay your bills on time.

Making sure you pay what is owed on time, for example, in the form of a loan and keeping up with monthly repayments, can help to build up a good history of borrowing, and helps to show that you are a responsible borrower and able to keep up with repayment when due.

Missing payments can have the exact opposite effect and can actually damage your credit score. This is because it provides evidence that you aren’t able to keep up with repayments, and therefore are a less responsible person to lend to.

Finally there is no harm in checking your credit score since 50% of Brits do not even check their scores to begin with! You can get free 14 day trials from the likes of Experian and Noddle or you can request a statutory credit report from the government for just £2.

Leave a Commment

CLOSE AD

Sign up to our daily news alerts

[ms-form id=1]