How can I improve my credit score?

A poor credit score can affect your life in several ways. You may find it more difficult – and/or more expensive – to get a mortgage, buy a car or even take out a mobile phone contract.

Cleaning up your credit history and boosting your score can get you closer to your financial goals. We’ve put together a step-by-step guide to doing just that.

Step 1 – check your credit history is accurate

Your credit history goes back 72 months (six years), and it records every time you make a repayment on time – or every time you don’t. It updates every month, so each month some information drops off and new information is added.

Lenders check your credit history when you apply to borrow. Your credit score, or credit rating, is a number provided by the three credit reference agencies to show how your credit history looks to lenders.

You can check your credit history for free at the following places:

Equifax via Clearscore
Experian
TransUnion (which was CallCredit) via Credit Karma

Checking your report has no effect on your credit score.

It is a good idea to check all three credit reference agencies to ensure that the details they hold are correct. They may not all hold the same information about you. If any details are wrong, you can ask the agencies to correct the inaccuracies.

For example, if your credit report states that you have a 'financial association’ with someone you’re no longer linked to, you can submit a ‘notice of disassociation’. You can find details of how to make these corrections on the credit reference agencies’ websites.

Step 2 – deal with your debts

People sometimes tell us they’re worried that beginning a debt solution will have a negative impact on their credit score. And they're right, to some extent.

Insolvency solutions are recorded on your credit report for at least six years from the date they start. These include bankruptcy, debt relief orders and individual voluntary arrangements.

Debt management plans (DMPs) aren’t directly recorded on your credit report. However, as you don't repay your debts as originally agreed when you're on a DMP, lenders are likely to send you notices of default.

Defaults are recorded on your credit report for six years, so this will have a negative effect on your credit score.

But let’s look at the big picture. Are you struggling to keep up with your financial commitments? Maybe you’re missing payments on loans or credit cards, or even your everyday bills. This will damage your credit score anyway, not to mention your peace of mind. If your lenders issue defaults or even county court judgments against you, these will be recorded on your credit report.

What’s more, struggling with money worries can have an impact on your mental health, your relationships and other areas of your life. We think that’s why our customers say the impact of a debt solution on their credit score is worth it in the long run.

Money worries? Get free debt advice today

Or learn how Money Wellness can help with free debt advice.

All our debt advice is free. Some solutions are free. For others, there’s a fee.

Get started

Step 3 – rebuild

Once your debts are sorted, you’ll have an opportunity to start rebuilding your credit history. What’s more, you’re likely to have developed strong budgeting skills during your debt solution. That means your credit report will begin to show that you’re managing your bank account responsibly. And even more importantly, all your essential payments are being made on time.

You can boost your credit score further by registering to vote and making sure that your bank accounts etc. are all registered at your current address. You can also try some or all of the tips below…

Rebuild by paying your bills on time

Prioritise paying all your bills in full and on time. This will show potential lenders that they can trust you with their money.

If you’re renting your home, you may be able to boost your credit score simply by paying your rent promptly. This may be an option for both private tenants and social tenants. Schemes you can use to do this include The Rental Exchange and CreditLadder. Sign up to one of these and make your full rent payments on time every week or month as usual. These rental payments will then be reflected in your credit score.

Some utilities providers also pass on information to the credit reference agencies. Ask your providers if they do this. If they do, the credit reference agencies will know whether and when you make your payments. This will help rebuild your credit score if you stay up to date.

But remember, this works both ways. Any missed or incomplete payments will have a negative impact on your credit score.

Rebuild by saving

LOQBOX offer a kind of regular savings account. LOQBOX treat the payments you make into the account as repayments on a loan. They then report these payments to the credit reference agencies. According to LOQBOX, making your agreed payment in full and on time each month should start to boost your credit score after around four months.

Rebuild by borrowing - carefully

If you’re confident in your ability to manage credit carefully without getting into difficulties again, you could consider taking out a credit card (but only once you have completed your debt solution). A credit builder credit card, for example, could help rebuild your credit score as long as you:

keep the balance low (less than half of the credit limit)
pay the full balance each month, so you never have to pay the interest. Credit builder cards tend to come with a high interest rate
remember to pay on time. As with any credit card, you will damage your credit score if you don’t manage to make at least the minimum payment by the due date

Don’t forget that your credit report includes a record of all your applications for credit. So if you try to take out a credit card and you’re turned down, this could suggest to lenders that you’re struggling financially, which will make them less likely to want to lend to you. The same applies if you make a lot of credit applications very quickly. So, apply for credit sensibly. Do your research and try to only apply for cards and loans for which you stand a reasonable chance of being accepted.