Our credit scores play an essential role in our daily lives. Your credit score affects various types of credit applications, such as a credit card, mortgages, or loans. It also affects what interest rates you need to pay when you borrow.
When you apply for credit, the lender will often use your credit score to decide if they’ll lend you the money.
With a healthy credit score, you’re more likely to be accepted by lenders whenever you apply for credit. If they turn you down, it’s likely because they felt you may not be able to afford the debt that comes with borrowing, based on your credit score.
Fortunately, your credit score is not set in stone. If you’re struggling with a poor credit score, there are many steps you can take to improve it.
In this guide, we’ll examine four effective ways to boost your credit score and improve your creditworthiness.
Let’s begin!
1) Make Payments on Time
Paying your bills, especially credit repayments, on time and in full will help you grow and maintain your credit score.
Making timely payments demonstrates that you’re able to handle your credit responsibly. Conversely, making late payments or missing payments altogether can harm your score and give lenders the wrong impression.
By demonstrating that you can stick to a repayment schedule and responsibly manage your financial obligations, you show lenders that you’re a responsible borrower.
One of the best parts is that this method is just as effective in various circumstances. When unexpected expenses, such as a car breakdown or urgent home repairs arise, you may have to take an emergency loan from an FCA-approved lender, like Salad Money. By making timely repayments on your loan, you can demonstrate financial responsibility and improve your credit score.
Setting up automated payments or reminders is an effective way to ensure you make all your payments on time.
2) Register To Vote
One of the quickest tricks to improve your credit score is putting yourself on the electoral roll. The electoral roll is a list of everyone who’s registered to vote in the UK. It’s also used by potential lenders to confirm you’re who you say you are and live where you live.
Registering to vote is a quick and effective way to make a positive impact on your score. Getting yourself on the electoral roll, or electoral register, is easy and can be done online in just a few minutes.
It also helps if you’ve lived at the same address for multiple years, as this further demonstrates your stability. However, even if you’ve moved homes, registering yourself to your current address will still significantly boost your credit score.
3) Dispute Credit Report Inaccuracies
Sometimes, the information on your credit report may be incorrect and can harm your credit score as a result.
An easy way to improve your score is to regularly review your credit reports with all the Credit Reference Agencies (CRAs) and dispute any errors. CRAs try their best to keep all credit report details up to date, but mistakes can still occur occasionally.
The issue is that these mistakes or inaccuracies can unnecessarily harm your credit score. That’s why you need to fix them. Common errors include having ex-partners financially connected to your account when they shouldn’t be to still having missed payment flags that had to be removed.
If you want to boost your credit score, regularly examine your credit report to eliminate any errors and inconsistencies.
4) Keep Old Accounts Open
Even if you no longer use an old credit card, it’s a good idea to keep the account open. Typically, credit scores benefit from a long credit history and a high total credit limit.
Closing old and established accounts will reduce the average age of your accounts and lower your total credit limit. You’ll find that it may take years before an account closed in good standing drops off your credit report, but the effects on your credit utilisation rate are instant.
However, if a credit card comes with a high annual fee you’re unable to afford, closing the account may be a good option.
To Sum Up
Your credit score is a numerical symbol of your financial reputation and responsibility as a borrower and it takes a lot of time and care to maintain it.
If you’re struggling with your credit score, you don’t need to worry.
Improving your credit score significantly may take some time, but there are many ways to give your score a boost to get started. An excellent credit score is often the result of many years of conscientious financial behaviour and smart money management choices.
While the above tips will certainly help you see improvements in your score, joining the same ranks as those with high credit scores will still take time.
By committing to doing your best and avoiding risky financial moves, you can maintain your credit score and potentially improve it. The biggest improvements will come with time and consistent dedication.
