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How To Improve Your Credit Rating

How To Improve Your Credit Rating

Everyone knows how important a good credit score is if you want to get a loan or a mortgage, but how do you protect that score? Keeping up with credit card payments and bills can go a long way towards helping you maintain a good score but life happens and things crop up.

What Is A Credit Rating?

A credit rating is a lender's way to measure the risk of lending to you. They use this to decide whether you can afford to borrow the amount offered and if you're likely to repay the amount borrowed.

How Is It Calculated?

  Whenever you try to get credit such as a loan, your credit score could be checked using information held by a credit reference agency. Your credit score is a points system based on your known credit history. If you have a low credit score, you will find it harder to get credit than someone with a high credit score. Things that affect your score include:

  • County Court Judgements
  • Missed mortgages payments
  • Missed loans payments
  • Not being on the electoral roll
  • Having no credit history – people want to know you’ve paid debts in the past
  • Not being truthful on credit applications


How Do I Find Out If My Credit Record Is Poor?

If you think you have a poor credit record, you could contact a credit reference agency. If their information is incorrect, you can ask to have it removed. If you would like to check your credit report, you can get a 30 day trial* of CreditExpert from Experian. Click here to visit the Experian website. * A monthly fee of £14.99 applies after your free trial – if you choose to cancel during your trial you will not be charged  

5 Things Which Affect Your Credit Score

While you might think that keeping up with loan repayments and regularly clearing your credit card will keep your credit score flying high, lenders are now gathering more personal data than ever before to decide whether to lend money to you for things such as mortgages and personal loans. To help keep you stay on top of your credit, we’ve picked out some of the more surprising things that might affect your score...  

1. Applying For Credit

Any time you apply for a new credit card or loan, it is likely a credit check will be carried out. While that’s perfectly understandable, this credit check will go on your file. There are two different types of credit checks – a soft inquiry and a hard inquiry. A hard inquiry is the standard check made by credit lenders and will affect your credit score. A soft inquiry, on the other hand, remains on your credit file but does not affect your score. Nor will it be visible to lenders on your credit report. If you're not sure which credit check applies to you, double check with your bank or lender about what type of credit inquiry will be made.

2. Registering For The Ballot Box

You may keep up with all your payments like the perfect borrower but unfortunately sometimes this is not enough. Nowadays lenders are looking beyond payment histories when they decide if you can be trusted to pay back a loan, and one of the most important factors they’re looking at is whether you’re on the electoral roll or not. If you’re not registered to vote then your credit score will suffer. It’s not that lenders care about your passion for politics: registering to vote allows companies to verify your name and address – an important factor when it comes to your credit score.  

3. Mobile Phone Payments…

Phone bills and mortgage applications have little in common but unfortunately one can seriously affect the other. If you miss your mobile phone bill payments, your credit score can take a serious hit. It‘s vital that you keep on top of your payments – especially when you get to the end of a contract. You might think you’re fully paid up but if you have any outstanding balance on your account and you don’t pay it, there could be trouble with your credit score. If you’re struggling to manage your money effectively, contact StepChange

4. Paying In Cash

Paying for everything in cash and not taking out anything on credit might seem like the best way to get or maintain a good credit score. However, using cash doesn’t tell lenders anything about your payment history or about whether they can trust you to make payments or not. The only way to prove this is to show that you can make payments on time – which is why avoiding card transactions, loans or credit cards can sometimes adversely affect your score. You should never put something on credit that you can’t afford, but if you can’t prove you can manage credit, you’re going to find it hard to get credit.  

5. Unused Cards & Accounts

Having several credit accounts to your name may seem fairly harmless, especially if you no longer use them. When assessing your application, however, lenders will look at how much credit you currently have available. This includes your credit card and overdraft limits, so make sure you cancel cards and close accounts that you no longer need.  

How To Improve Your Credit Rating

It’s all well and good knowing what effects your credit rating, but how can you improve it?

Spot Mistakes

Review your credit file to make sure their details about your credit history are correct (you can do so by clicking here). If there are debts which you can’t account for, investigate further. You could be the victim of identity fraud.  

Pay Bills On Time

It sounds simple, but many people forget that if you’re late to pay a bill, it goes on your credit record. Start budgeting so you know how much you need in your account and when.  

Start Small

Apply for credit that you're likely to get, borrow only small amounts and make sure you pay it back on time and in full. Continue doing this for a year, as this will show that you are making regular repayments for what you spend.  

Quotation Search

Instead of doing a credit search for a loan quote, ask to do a quotation search or a soft enquiry. This means that this query won't be logged on your credit file. 

Keeping Score

Building your credit rating takes time and effort, but stick with our simple tips and you’ll be on your way.    

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A home credit loan from Provident will require a member of our Customer Experience team to discuss your income, outgoings and other financial commitments. Available to UK residents aged 18 and over. Written quotations are available on request. Prices may vary in Northern Ireland.

Provident is a trading name of Provident Personal Credit Limited.  Registered Office: No. 1 Godwin Street, Bradford, West Yorkshire, BD1 2SU. Registered number 146091 England. Authorised and regulated by the Financial Conduct Authority.