A Strong Credit Score is Your Key to Financial Opportunities. Here is how you can improve yours!
Your credit score is a crucial financial metric that significantly impacts your ability to access credit. A high credit score opens doors to better interest rates on loans, credit cards, mortgages, and more.A low credit score reduces these chances.
In this article, we have highlighted proven strategies, to help you improve your credit score and secure favorable financial terms. Ready to improve your credit score?, Below are 10 tips.
10 tips to improve your credit score
Prove where you live
Register on the electoral roll at your current address. You can do this even if you’re in shared accommodation or living at home with your parents. This procedure varies from nation to nation. Find out how it is done in your country.
Build your credit history
If you’re new to credit or have limited credit history, building a solid foundation can be challenging. However, there are effective strategies to improve your creditworthiness:
Secured Credit Cards: Start with a secured credit card, which requires a security deposit. Responsible use can help build your credit history.
Authorized User: Ask a trusted individual with good credit to add you as an authorized user on their account.
Credit-Builder Loans: Explore credit-builder loans specifically designed to help establish credit.
Consistent Payments: Make timely payments on all your credit obligations.
Monitor Your Credit Report: Regularly review your credit report for errors and take action to correct them.
Make regular payments on time
Demonstrate your financial responsibility by making timely and full payments on all your credit obligations. A history of consistent payments is a key factor in improving your credit score.
Keep your credit utilization low
Your credit utilisation is the percentage you use of your credit limit. For example, if you have a limit of £2,000 and you’ve used £1,000 of that, your credit utilisation is 50%. Usually, a lower percentage will be seen positively by lenders, and will increase your credit score as a result. If possible, try and keep your credit utilisation below 30%
See if you could get an instant score boost
By securely connecting your current account to your Experian account, you can show us how well you manage your money. We’ll look for examples of your responsible financial behaviour, such as paying your Netflix, Spotify and Council Tax on time, and paying into savings or investment accounts. We’ll share a summary of your boosted data with participating lenders when you search or apply for credit. Find out more about Experian Boost and see if you could instantly improve your credit score.
Check for errors and report any mistakes on your report
Even small mistakes, such as a mistyped address, can affect your score and could be enough for a lender to refuse you credit. It’s worth checking your credit report to make sure all the information on it is accurate and up to date.If you do spot a mistake, contact the provider directly and ask them to change it. If you need help, we can raise a dispute with them on your behalf. If there is negative information that is correct but occurred during special circumstances (such as a period in hospital or losing your job) you can ask us to add a Notice of Correction to your credit report explaining this.
Monitor your credit file for fraudulent activity
If fraudsters gain access to your personal details, they could take out credit in your name without you being aware. If you see something on your credit report that is wrong, such as an application you don’t recognise, Experian’s specialist fraud support team can help.Do this, if you’re a victim of identity fraud.
Avoid moving home a lot if you can This isn’t always possible to avoid, but it’s worth bearing in mind that lenders like to see stability in your circumstances. Moving home frequently may make lenders think you could be having trouble paying rent, for example. Find out why your address is an important part of your credit history.
Keep old accounts open and show a long credit history It can be good to show lenders that you can successfully manage multiple credit accounts, especially over a long period of time. Most credit scoring models tend to reward you for having long-standing, mature credit accounts, and for only using a small portion of your credit limit. For more information, see our guide on what to do with unused credit cards.
Consider getting a credit builder card
If you’re looking to improve your credit rating, then a credit builder card can help rebuild your credit score. They typically have low spending limits and high interest rates. When you first get a credit card, it might briefly cause your score to drop. But used well, it can help you build your score over time.Credit builder cards can be effective if you use them for a small amount of spending each month (on everyday essentials you were going to buy anyway). Then make sure you repay the card on time and in full each month to avoid paying interest.
Why should I improve my credit score?
When you apply for credit, the lender will calculate your credit score to help it decide whether to lend to you. It’s usually based on:
Information from your credit report.
Your application details.
Data they already hold on you, if you’ve been a customer before.
Each lender may have a different way of calculating your credit score, depending on what information they have access to and their lending criteria.
Credit reference agencies (CRAs) like Experian also calculate credit scores, for lenders and the public. You can get an idea of how lenders may view your credit history by looking at your free Experian Credit Score. And don’t worry, checking your score won’t affect it.
Conclusion
As stated earlier, a good credit score opens financial opportunities for you. Carefully go through the tips listed above and apply them. You’ll sure be on your way to improving your credit score.
