Credit scores are vital, but many of us only think about them when we are looking at personal credit options.
While poor credit scores can feel like a huge barrier when it comes to unlocking credit options, a good credit score can mean access to better borrowing terms, lower interest rates, and a host of other benefits.
But how can you improve your credit score?
Capital One UK has shared some of the ‘simple’ ways that may help improve your chances of boosting your credit score.
How can I boost my Credit Score?
Ensure you are on the electoral register
Even if you don’t vote, it’s so important for your credit score to ensure you register on the electoral roll at your current address, even if it’s shared accommodation or living at home - updating this information can help improve your credit score.
Make regular on time payments
Aim to pay your balance on time and in full, including anything you have on Buy Now Pay Later. This shows lenders you’re reliable and capable of handling credit.
Check for errors on your credit report
The smallest errors can impact your score and could be enough to make a lender refuse you credit. It could be as small as a typo in your address, or a debt that has been paid off but still showing as outstanding. If you spot a mistake, it’s important to ask the provider directly to ask them to change it, if it’s a mistake then it’s their responsibility to correct this.
Get alerts when your credit score changes
Not only does it help you manage your own credit score by checking it frequently, but it also helps you monitor for any fraudulent activity. Fraudsters can use your personal details to take out credit in your name without you being aware, known as identity theft. If you see something you don’t recognise on your credit report, it’s important to reach out to the provider’s fraud support team to report this immediately.
Keep your accounts open
The longer you keep your current account and credit accounts open for, the more likely a lender will see you as being able to manage your finances. Most credit scoring systems reward you for having long-standing accounts, so before you close an account after a couple of months, think how this could have a long term effect on your credit score.
Avoid moving loads
Whilst this isn’t always possible, if you are renting, try avoiding moving every couple of months. Lenders like stability, and the longer you are at an address, the less likely it’ll influence lenders' decision to offer you credit.
Manage your overdraft well
Some bank accounts have 0% interest rates on their overdrafts, but it’s important to see it as there for a rainy day only, not as part of your regular budget. An overdraft is a loan, and going over your arranged overdraft limit, or regularly using an unarranged overdraft, can negatively impact your credit score.
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