How to improve your credit score – and why it matters

Your credit score can make an enormous difference to your life. It’s not only a major factor when it comes to getting the green light for a mortgage or loan. It also affects whether you can rent, sign up to a mobile phone contract and take out insurance. A poor score locks you out of the best deals. It’s basically an assessment of your money management skills, and whether you are likely to pay bills on time, or even at all. So, if you’ve got a rocky financial track record, you may struggle to achieve your life goals.

Your credit score will be a three-digit number, and the higher the number, the better your financial history. Experian Link opens in a new window, Equifax Link opens in a new window and TransUnion Link opens in a new window are the three major UK credit reference agencies, and each uses its own scoring system. Let’s take Experian, the UK’s biggest credit reference agency. Its national average credit score currently stands around 790 out of 1,000, or within the ‘fair’ bracket. “But don’t get too hung up on the number,” stresses James Jones, head of consumer affairs at Experian. “The key is to aim for a ‘good’ credit score.”

Fortunately, you can check your score for free with all three agencies. Experian Link opens in a new window has a free service to check your score. Or, you could sign up for lifetime membership to ClearScore Link opens in a new window, for example, which uses Equifax data. Or, use Credit Karma Link opens in a new window, which uses TransUnion’s data, for more regular weekly updates.

Once you’ve found out where you stand, if you need to, here are some ways you can boost your credit score…

1. Take on some credit, and manage it carefully

Get a credit card Link opens in a new window, and use it for small, regular payments. Credit reference agencies need to build a record of how you manage debts, so taking on some form of credit is important. But pay off more than the minimum amount each month and, ideally, wipe out the lot.

Or if you're a buy now, pay later user then check out Virgin Money Slyce Link opens in a new window. It allows you to enjoy the benefits of a traditional buy now, pay later product in a simple, safe and responsible way, while building your credit score for the future. 

Becky Derbyshire, 39, a lifestyle blogger from Cirencester, Gloucestershire, says: I only realised the importance of using a credit card when my husband and I applied for a mortgage. I had a good score because I was using a card regularly, and paying it off, but he didn’t because he wasn’t, and this was a problem. Since then, we’ve both had separate credit cards and used them to pay for things like food and petrol. Now, we both have good scores!

2. Let your credit history mature

Shopping around for the best deals is financially savvy. However, using the same credit card accounts over several years can improve your score. Jones from Experian says: A five-year-old credit card with a high limit, low balance and perfect payment record can boost your Experian score by around 200 points, which could supercharge your score from ‘fair’ to ‘excellent’.

Also, bear in mind that having lots of accounts open can raise your chances of falling victim to fraudsters, alongside reducing your credit score. So, make sure you shut down unused, old accounts, and use just a few, wisely.

3. Check your credit report for mistakes

Brenda Gabriel, 39, a public relations consultant, found her score had suffered because an IVA (Individual Voluntary Arrangement) Link opens in a new window remained on her record years after it had been paid off. I took an IVA out in my 20s to tackle debts, and paid it off five years later, she says. I only realised it was still on my credit record when I came to apply for a mortgage many years later.

Gabriel managed to get the error removed by adding a ‘notice of correction’ to her credit file. But, ideally, people should check their file before applying for credit, she says. If you spot an error, contact the firm involved to get things put right. More seriously, you may find there’s an account listed on your file that doesn’t belong to you. If so, you may be a victim of fraud and you must contact the credit reference agency as well as Action Fraud Link opens in a new window.

4. Check out specialist services – particularly if you’re renting

Plenty of firms are springing up to help boost your score. For example, rent payment isn’t automatically included in your credit report, but new tenants can register with firms like Canopy Link opens in a new window and Credit Ladder Link opens in a new window to have these included to increase their credit score.

Your council tax payments also aren’t added to your credit report. However, Experian Boost Link opens in a new window is a free service that sources additional information from your current account Link opens in a new window to increase your score, including monthly council tax and digital streaming service payments.

5. Make ‘soft’ credit applications

Check your chances of being accepted for credit using so-called ‘soft searches’ to test the water. This way, you avoid a full, or ‘hard’, search that could see your score tumble, and particularly if you make several applications at once.

Shop around using eligibility-checking services, says Jones. If you can, avoid applications for new credit for six months, which could boost your score by 50 points, he adds. MoneySavingExpert Link opens in a new window offers a free eligibility calculator, showing which loans and credit cards you are likely to be accepted for, for example, without leaving a footprint on your credit record.