How to Improve Your Credit Score

If you have bad credit or a non-existent score, building your credit can seem daunting. Don’t give up. Taking a moment to read these simple tips is a good start to establishing better credit.

Review your credit report.

You can’t know how to improve without knowing where you’re coming from. Getting your credit report from a credit reference agency will help you understand your credit rating, as well as any factors that are negatively impacting it. If there are errors on your report, the credit reference agency can help get these amended. If there were special circumstances causing you to have financial trouble, like a divorce or health issues, the credit reference agency can have this noted in your file.

Streamline your accounts.

Fewer, well-managed accounts look better to prospective lenders. Get rid of open accounts you don’t use (particularly common with store cards) and transfer outstanding balances on high interest credit cards to cards with special balance transfer offers. In addition to improving your credit score, this helps make it easier for you to manage your finances.

Stop applying for too much.

When you have bad credit, it’s tempting to continually apply for credit cards and loans as credit lifelines. Don’t. Every unsuccessful application reflects poorly on your credit rating. Take the time to research the credit cards and loans before you apply. Most credit cards will outline their eligibility requirements up front on their websites.

Don’t miss payments.

Even for things like your mobile phone contract. Late payments are noted in your credit history and negatively impact your credit rating. If you’re having trouble, contact the companies you’re working with. They can help restructure your payments so you can meet your obligations. If you’re facing real hardship, a debt management charity can help you consolidate your payments.

Document your address.

Registering on the UK Electoral Roll ensures you’re eligible to vote and is an important part of your credit report. Lenders like to know that there’s proof of your identity, which is why the Electoral Roll information is used in this way.

Use a credit building card responsibly.

Just because you have bad credit doesn’t mean you can’t get a credit card. There are a lot of cards available on the market for those new to credit or those with poor credit. Once you get your card, use it to make small, manageable purchases and try to avoid carrying a balance. This will demonstrate that you can use credit cards responsibly and help you avoid paying too much in credit card interest.