Home Business Insights & Advice Simple tips to improve your credit rating

Simple tips to improve your credit rating

by Sarah Dunsby
26th May 23 9:59 am

Building a good credit rating is essential if you want to borrow money now or in the future. This could mean a loan, credit card, or mortgage. There are many things that can affect your credit score including missed payments and wrong information.

If you’re looking to boost your credit score for better financial deals in the future, there are a few things you can do. Take a look at these simple steps.

Report any mistakes

Keep checking your credit report periodically for any mistakes. Simple mistakes on your credit report can lead to poor credit scores. It could be something as small as a spelling error in your home address.

There are also times when mistakes are made by third parties and can stay on your report until you ask for it to be changed. For example, your report may read that you’re behind on council tax payments when you’re fully up to date. If your score declines unexpectedly, check why.

Pay bills on time

If you want your credit score to stay good, you’ll need to make sure your bills are all paid on time. This is the best way to let lenders know that you can afford to make repayments and always make them on time. If you think you may miss a payment, get in touch with your bill provider and make alternative arrangements before the missed payment ends up on your credit report.

If you’ve already missed a payment, some reports will allow you to comment on the report to explain why. Try to avoid missing any further payments.

Avoid multiple applications

If you’re applying for credit and you’ve been turned down, it can help your score if you stop searching. Multiple searches can damage your credit file and your score will inevitably drop. If you need to apply for credit, it can help to wait in between applications or apply only to lenders who offer applications that won’t affect your credit score.

It’s also worth looking at the recommended lenders. Some credit reports offer pre-approved options based on your credit score and current circumstances.

Rent payments

If you’re hoping to get a mortgage in the near future, you may want to think about adding evidence of rent payments to your credit file. This hasn’t usually been done in the past but landlords are now able to add evidence of rent payments to Experian for their renters. This is done via the Rental Exchange Scheme.

When you apply for a mortgage, it’s a great way to let lenders know that you can keep up with property repayments of a similar monthly price.

End financial association

If you have a joint account with someone who has poor credit, it may reflect badly on your own credit score. Even if you do everything you can to keep your score high, being financially associated with someone with a low score will be telling on your report. Ending that association by closing the joint account will help you to increase your score.

If you’ve found this article helpful, take a look at the rest.

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