Lenders and consumers may both use credit scores calculated by credit reference companies (CRAs) like Experian.
Checking your free Experian Credit Score will provide you an indication of how lenders may evaluate your credit history. You may safely check your score without worrying about a negative impact. Here are ways to boost your odds of good credit.
Exactly what is a credit score?
Credit scores are used by lending institutions to determine whether they will provide credit to applicants. Common foundations include:
- Data taken from your credit file.
- Specifics of your application.
- If you're a returning client, they'll use the information they have on file about you.
Depending on the data they have access to and the criteria they use to make loans, various lenders may use different methods to determine your credit score.
Tips for raising your credit rating
Knowing your credit score and taking steps to enhance it might increase your chances of getting approved for credit at favourable interest rates in today's economy.
Don't lose hope if your application for a credit card, loan, or mortgage was denied or if you're worried that your credit history will prevent you from being approved for any of these. You may raise your credit score by taking appropriate action.
Find out what factors into a strong credit score, along with 16 strategies to raise your own, and estimates for how fast you could see those improvements.
What is an acceptable credit rating?
There is no standardised credit ‘rating' or ‘score' that every lender uses to determine whether or not to provide credit. A “credit blacklist” does not exist, either.
Credit reference companies (CRAs) like Experian may have sold a number called a credit score as a representation of your creditworthiness, but lenders look at a broader picture.
The three largest credit reporting agencies in the United Kingdom each have their own standards for what constitutes a good or exceptional credit score.
- A score of 811 or above on the Equifax scale is superb.
- From 881 to 960 on the Experian scale, you're doing well; from 961 to 999, you're doing phenomenally.
- TransUnion scores between 604 and 627 are considered acceptable, with scores between 628 and 710 being outstanding.
Having a high or great credit score is helpful, but it is not a guarantee that all lenders will provide you credit or treat you equally. There is no universal procedure for determining whether or not a borrower will be approved by a lender; hence, you may be turned down by one institution but approved by another.
If your credit score is low or ‘poor,' you should take action to raise it so that lenders will be more willing to lend to you and give you more advantageous interest rates (APR).
Keep reading to learn the 16 ways in which you might raise your grade.
Credit score: 16 essentials to boost it…
Check out our simple and fast suggestions for raising your credit score, which ranges from registering to vote to limiting your use of credit.
1. Examine your credit report for errors and get them fixed.
At the very least a few times a year, you should verify the accuracy of the information on your credit report.
Given the prevalence of identity theft and fraud nowadays, it's smart to monitor your credit report often.
The three major CRAs (Equifax, Experian, and TransUnion) may have different information on you, so it's important to check all of them. You are entitled to a free copy of your credit report from these companies under the law.
If you find any errors, you should get them fixed right away so they don't affect your credit score needlessly or prevent you from being approved for credit in the future.
Either the firm that originally gave the inaccurate information or the credit reference bureau will conduct an investigation at your request.
These can be far more common than you might think, and even someone who has never missed a bill or credit payment can find themselves with incorrect negative marks on their credit history from years ago.
Keep in mind that whether or not you plan on using a particular account, it is still in your best interest to update the information associated with it. Address inconsistencies across accounts, for example, might cause you to fail application ID checks.
How long does it take to get errors removed from your credit report?
One of the quickest methods to improve your score is to fix a mistake you made. Your credit report must be correct by law. Experian claims it can settle disputes in less than two weeks, but the CRA and lender both have up to 28 days to react.
2. Voter registration.
You may have a hard time getting credit if your name isn't on the voter registration list.
One of the most important parts of the identification checks that lenders must do is to verify that you really reside at the location you provided on your application.
The biggest UK CRA, Experian, claims that registering to vote may increase your score by up to 50 points.
It simply takes five minutes to register to vote on the official website, and you can do it whenever it's convenient for you.
It may take more time, or perhaps be denied, to complete your applications if you can't register to vote. But you may explain why you couldn't register to vote by adding a remark to your report.
If you are a non-EU foreign citizen and have evidence of residence, for example, you may ask for a notice of rectification to be put to your credit file. For a sample of appropriate language, please refer to Equifax's provided guidelines.
How soon will you see improvements after adding your name to the voter registration list?
Within six to eight weeks of registering to vote, your score might increase since councils report information monthly to CRAs.
3. Put your rent money to good use.
When applying for a loan, such as a mortgage, a tenant's monthly payment history may not seem as strong as a homeowner's.
Tenants in private, public, and non-profit housing may now use a rent reporting tool to have their payment history recorded on their credit reports.
Tenants in public or subsidised housing may improve their credit scores by requesting that their landlord record their monthly payments to a free service called The Monthly Exchange.
Tenants who use a private landlord or letting agency have the option of either having their landlord or agent submit rent payments to The Rental Exchange or self-reporting using a service like CreditLadder or Canopy.
CreditLadder updates all three bureaus when rent is paid on time. This service costs £5 each month, but is free if you choose to file with just one agency.
Canopy also provides a similar service, with RentTracking reporting payments to Experian for free and all three for £4.99 per month.
With your approval, CreditLadder and Canopy may monitor your monthly rent payments by accessing your checking account data via open banking.
The inclusion of rent payments made on time might have a positive effect on credit scores.
Loqbox also introduced a new function in February 2022 called Loqbox Rent, which monitors rent payments and shares that information with Experian. The goal is to improve a person's credit standing so that they may qualify for a mortgage in the future.
In what time frame may your credit be improved by reporting your rent?
Within six to eight weeks of making rent payments via CreditLadder, the information will show up on your credit reports at Experian, Equifax, and TransUnion.
Rent payments tracked by Canopy will be reported to credit bureaus two months from the day monitoring was initiated.
4. Open banking may increase your credit rating.
Council tax, Netflix, and savings accounts may all be reported via Experian Boost.
In November 2020, Experian released a new tool to assist customers swiftly raise their credit ratings.
With Experian Boost, you may utilise open banking to give the company access to your financial data.
They may now access data that was previously inaccessible, such as your income, council tax payments, savings habits, and subscription payment details.
5. Do ‘soft' searches while applying for new credit.
A ‘hard' credit search is a thorough investigation of your credit history conducted by a potential lender. You should expect this to create a ‘footprint' on your credit report that will be seen by future lenders. Too many hard credit checks could be seen as a red flag by potential future lenders.
In order to get an idea of whether or not your application will be approved and what interest rate you would be charged, it is worthwhile to ask lenders to run a'soft' search instead, which will not be visible to other lenders on your credit report.
Soft credit checks are being offered by a growing number of financial institutions for a variety of loans, credit cards, and mortgages.
How soon will this improve my score?
Soft searches will not improve your score, but they will help keep it safe. When looking for a new mortgage, loan, or credit card, it's best to avoid doing hard searches so your score doesn't take a hit.
6. Don't fill out too many forms at once.
It's not a good idea to quickly apply for another credit card or loan if you've just been denied one, since doing so may give lenders the impression that you're having financial difficulties.
Requesting financial aid should be spaced out over a period of at least three and no more than twelve months. Each submission, whether approved or rejected, remains visible for a full year, but its effects are often felt only in the first three.
7. Be mindful of ‘debt utilisation’.
Lenders will consider both your current amounts and your available credit when calculating your risk.
Potential lenders will consider how much of your credit limit you use on a regular basis. If you’re constantly spending up to your credit card or overdraft limit, lenders may see that as a sign that you have some issues with money management.
Keeping your credit card balance below £50 or 30% of your limit may increase your score by 90 and 60 points, respectively.
Lenders may view cash withdrawals from a credit card negatively unless you are using a card specifically intended for use in foreign countries.
How soon will this improve my score?
Every four to six weeks, financial institutions update CRAs with new data. If you use less than a third of your available credit on all of your cards, your credit score should immediately improve.
8. Cut ties financially with former partners.
Having a negative credit score won't impede your ability to get a mortgage or a flat with someone you're living with or married to.
A “financial association” is formed between you and the other account holder when you open a joint current account.
Because their financial situation may impact your capacity to make repayments, lenders may consider it alongside yours when evaluating your application.
Request that all three credit reference bureaus delink your name from any joint bank accounts you and your ex maintained so that your ex's financial status doesn't affect your ability to get credit in the future.
How soon will this improve my score?
By ‘disassociating' yourself from a former spouse, you may see an improvement in your credit score in as little as one month.
9. Stay out of debt and CCJs.
There will be serious damage done to your credit score if you go bankrupt, join an IVA, or have a CCJ entered against you by a county court.
A CCJ will lower your score by 250 points, and account default will lower it by 350 points, as reported by Experian.
If you are having financial difficulties, it is recommended that you investigate other possible solutions.
IVAs and CCJs stay on your credit record for six years, the industry standard. After that, your rating should update instantly.
10. Put up more money than required.
Lenders may think you're having financial trouble if you're simply making the very minimum payment on your credit card each month.
If you want to get out of debt quicker, you should pay more than the minimum or the entire amount due each month.
If you want to know how long it will take you to pay off your credit card bill in full and how much it will cost you, you can use our handy calculator to do just that.
11.Don't let a payment go unmade.
A good way to prove your responsibility as a borrower is to make all of your payments on schedule and never go over your credit limit.
If you struggle to pay your bills on time every month, direct debit payments may be an option for you.
If your debts are becoming too much to bear, you should let your creditors know as soon as possible. Seeking their assistance is preferable than regularly missing repayments on loans or credit cards without providing an explanation.
A negative mark will appear on your credit record within a month if you are late or skip a payment. According to Experian, a single missed payment on a credit card or loan may reduce your score by as much as 130 points.
The consequence of a late payment will reduce during the six years it remains on your report. Your credit score may begin to improve after missing just one payment, and it should be entirely restored within a year.
12. Use a credit builder.
It's easy to imagine you have a high credit rating if you've never had to borrow money before. However, this is quite improbable.
A lack of a positive payback history might work against you when applying for a loan since lenders want to know you have the discipline to return the money you borrow.
According to Experian, 5.8 million individuals in the UK have either a very limited credit history or no history at all. Because of this, the financial system cannot identify you since the CRAs have very little or no information on you at all. This might result in being denied or charged more for things like mortgages, loans, and credit cards.
Therefore, even if you are in a position to repay a loan or credit card in full and on time, you may discover that you are denied.
One option is to apply for a credit card that is created for customers who are trying to establish or repair their credit.
You should never borrow money using a ‘credit builder' card, since their APRs are quite high because they are designed for consumers who are a greater credit risk.
How soon will this improve my score?
If you've never borrowed money legally before, it might take six to twelve months of on-time payments to build credit.
13. Register your name with assets.
According to Credit Karma (which uses TransUnion data), the ‘gender credit score difference' is due to a lack of financial items held in the name of women.
According to the study, 31% of women reported having no credit cards, mortgages, or personal loans because they had placed all or most of their financial arrangements in their partner's name.
Putting your cell phone and other utilities in your name can enhance your credit score even if you don't have a loan or credit card.
14. Stay away from cash advances if at all possible.
When compared to other loan types, payday advances often carry exorbitant interest rates.
Even while Experian says getting a payday loan shouldn't hurt your credit, it's important to keep in mind that each lender has their own set of requirements for accepting loans. Not only that, but the sky high interest can make it easy to fall behind on your payments.
One reason a mortgage lender can reject an application is if they discover the borrower has relied on payday loans in the past.
15. Don't close your previous bank accounts just yet.
It may be beneficial to keep older accounts open if they have been adequately handled.
Keeping credit limits higher can help you keep credit utilisation low, which is a good sign for lenders. Just be sure that you don’t start using all the extra credit, and don’t go crazy with taking on too many new credit lines. Some lenders may become wary if they see that you have too much open credit that isn't being utilised.
16. Don't skip out on payments for no reason.
If the rising cost of living has you worried about making your monthly payments, you may be considering skipping a payment or two. For instance, your mortgage servicer may agree to a reduction in your regular monthly payment or even a temporary suspension of payments.
Although a payment holiday might be a lifesaver for your short-term financial flow, you should be aware that it will show up on your credit report and could affect your ability to get credit in the future.
A credit report should not include a payment suspension that was authorised between March 17, 2020 and July 31, 2021.
How quickly is it possible to improve your credit rating?
Raising your credit score is a long-term endeavour, not a quick fix.
Credit scores are based on a variety of criteria, so it may be necessary to address many concerns over time rather than just one to see a significant improvement in your score.
Summary…
In what time frame can one expect to see a rise in their credit score?
There are a lot of variables, but you should realise that it won't happen quickly. It may take up to two months for positive changes, such as a new credit card or bank account, to show up on your credit report, so be patient.
New accounts may take some time to mature (a few months) before they begin positively impacting your credit score.
Building a positive credit history begins with establishing a good payment history. Your credit report will include negative information such as late payments, defaults, and court judgements for a full six years.
The effect of late payments and defaults, however, will fade with time. They will be removed from your credit record in its entirety when six years have passed.
Related Guides:
- How to Get a Free Credit Report
- Can You Withdraw Money From a Credit Card?
- Best Credit Cards to Build Credit
