How to boost your credit score


No matter whether you have had credit problems in the past, or you have always paid your monthly commitments in full and on time, it is always possible for you to improve your credit rating.


A good credit rating will make it more likely that you will be agreed for competitive loans, credit cards, mortgages and other forms of credit. And the better your credit rating, the lower the interest rate you are generally charged.

So, however good your credit rating is, here are four ways to make it even better.

1. Take out more credit
The most common reason that British consumers are declined for credit cards and loans is not because they have adverse credit on their file, but because they have ‘thin credit.' This is where a lender can't access enough information about them to decide whether or not they represent a good risk.

If you currently have thin credit, you can improve your credit rating by taking out additional loans, including credit cards. This is also true if you have a less than perfect credit history. Bad credit credit cards, for example, allow you to gradually rebuild your credit rating over time as you build up a track record of successfully managing credit. These types of cards are widely available and the criteria for taking them out are generally less strict than for standard credit cards.

If your credit rating is already good but you'd like to make it better, taking out additional credit will still help. In this case, a rewards credit card might be a particularly useful choice.You can use the card for your weekly groceries and fuel shopping and generate some useful benefits, such as vouchers or cash-back. Meanwhile, the increased credit line and positive repayment history will help boost your score. 

2. Make sure the information on your file is correct
There are three credit reference agencies in the UK -- Experian, Call Credit and Equifax -- and banks and building societies use the information held on their files to make lending decisions. To ensure your credit rating remains as high as it can be, it's important that you review your file on a regular basis and make sure that innacurate information isn't dragging down your score. 

Under the 1974 Consumer Credit Act, you have the right to obtain a copy of your credit file at a cost of £2. You can do this online at the websites of the credit reference agencies or by telephoning them and requesting a printed copy.

You should carefully check the information at least annually to ensure that all the information is accurate and up to date. If the information on your file is inaccurate, it could cause a lender to deny you a loan or credit card that you would otherwise qualify for.

Also check to make sure your address is correct on all of your credit reports and that you have changed your address on all financial products. In addition, make sure that you are on the electoral roll. This is one of the most important factors a lender will take into account when deciding whether to agree credit.

3. Manage your accounts carefully
Always make your payments on time; otherwise your score will drop rather than rise. No matter whether you have a great or a poor credit record, this is the most straightforward way to ensure your credit rating remains as good as possible. 

Pay at least the minimum amount due on time, and, if possible, pay more than that. If you think you may have to miss a payment, speak to the creditor involved and see if you can agree a date where you can repay the debt. Otherwise, the missed payment will appear on your credit record and negatively affect your score.

Finally, if you can, strive to keep a zero balance on all your cards.

See related: Study: Many Brits lack key knowledge of credit scores; Applying for a new card? Check your credit score first

Published: 13 June 2011