The fastest route to a high credit score

By Benjamin Salisbury

fastest-route-high-score

Building a strong credit score is the key to unlocking access to financial products that can help you reach your financial targets, such as getting a mortgage to accessing the best deals on credit cards and personal loans. A high credit score helps you obtain credit at the best rates.

Like most good things, a high credit score won't come easily or overnight. However, there are some things you can do to fast-track your path to good credit.

Check your credit
The first step is to know your current credit score and what's on your credit report. This will give you an idea of whether you need to make drastic changes or just minor improvements.

"Your credit report is a record of your borrowing history from the last six years and is used by lenders to decide whether to lend to you, so it's vital to ensure it's an accurate reflection of your debt history and financial situation," Paul Wiseall, brand manager at CallCredit said in an emailed response to questions.

Check for anything that may be bringing your score down - missed payments, defaults or even errors and fraud.

You can access your credit report for free from ClearScore or Callcredit. Experian and Equifax offer free month-long trials with unlimited access to your report and score, after which a fee applies unless you cancel. ClearScore offers your credit score for free as well, but you must pay a monthly fee to access your score from Callcredit.

Different lenders have different scoring criteria relating to their specific lending models, but typically, if your score is good with one agency, it's likely to be good at others, too.

Experian ranks scores out of 999, and classes an 880 score as good. Equifax, meanwhile, ranks out of 700, and considers a score of 420 or higher as good, and Call Credit classes a good score as four out of five.

Once you know where your score stands, take these actions to improve it:

Do's and don'ts on your journey to a higher credit score

HSBC Bank has produced this infographic for digital media solutions company Neo@Ogilvy that looks at what actions you should take and what to avoid to improve your credit score. (Story continues after image.)

hsbc-high-score

"Based on the Experian credit score (0-999), registering on the electoral roll could see your score improve by up to 50 points and using less than 30% of your credit limit can improve your Experian score by up to 90 points," John Webb, consumer affairs executive at Experian said in an emailed response to questions.

Other ways to improve your credit score are to pay bills on time -- missing a payment could cut your Experian credit score by up to 30 points -- and check your credit file for mistakes or fraudulent activity.

"These are generally rare, but if they do occur, then Experian will help you query and correct them by working with the lender," added Webb.

Make sure you are not linked to another person, such as an ex-spouse or flatmate, because their actions can drag your score down if you have accounts in joint names that are in arrears.

"If you spot anything that looks wrong, you need to contact the lender directly to ensure that they are sending accurate information to credit reference agencies," said Wiseall.

If you are a young adult, you may have little or no credit history at all. Although you have no missed payments recorded, lenders also have little historical information about your ability to manage credit, which makes it harder for them to assess your level of risk, and your score may be low.

To remedy this, try getting a credit-building card and using it wisely to build your credit and improve your chances at obtaining low-interest credit in the future, when you are ready to buy a home, purchase a vehicle or get married.

How long will it take to improve my credit score?
Your age and the degree of financial history on your credit file can affect how long it takes to improve your credit.

If you are older, have years of history and have been involved in high-value credit applications for mortgages and other loans, one minor mistake or ding will have less impact.

Younger Britons, on the other hand, who haven't built up an extensive credit history, will notice a much greater impact from even one slip-up.

In all cases, your most recent financial activity will have a stronger effect than past activity, and if you miss a payment, the longer the bill goes unpaid, the greater the impact on your credit score. Missed payments stay on your credit file for six years.

The severity of past mistakes can also affect the time it takes to make your way back to the top.

For instance, unless you repay the full amount relating to a county court judgement, it would stay on your credit report for six years, potentially jeopardising any credit applications you make in that time.

Bankruptcy orders usually last for 12 months, but if you are declared bankrupt it stays on your credit file for a minimum of six years.

"If your credit score is low due to lack of information (such as not being on the electoral roll) or having high balances on existing accounts, then you may be able to rectify this fairly quickly and see some improvement," said Webb. "However, if your credit score is poor due missed payments or having public financial records such as insolvencies or court judgments, then this could take longer to remedy."

This is why, in addition to performing a regular credit report check-up, you should always review your credit report before applying for any credit or loans, Webb said. For instance, if you're considering buying a home in the next year, try to check your credit about 12 months in advance. The same goes for other financial milestones.

"It gives you time to prepare for such an important purchase," Webb said.

See related: Are you a 'revolver' or 'transactor' - and how does it affect your score?Clearing up confusion over credit reports, scores

Published: 1 December 2017