We explain why your credit score might be low and give you 10 simple steps to help you improve it.
A higher credit score could help boost your chances of being approved for the best financial products at the best interest rates (e.g. mortgages, credit cards and loans). So it's always worth trying to work on your credit score and make it the best it can be.
(If you're in a rush, scroll to the bottom to watch a short video about this article).
1. Use a credit card little and often
Using credit regularly and responsibly is a key element to building your score. Keeping your credit card active, by spending small amounts and paying your bill off each month, makes you appear more attractive to lenders and can help boost your score. This is because it shows you can reliably pay back any money you borrow.
2. Keep your credit utilisation low
For a better credit score, try not to use too much of your available credit. Keeping your credit card utilisation low, preferably under 30% of your limit, shows lenders that you can manage your credit sensibly. You can see how much of your credit you’ve used by logging in to your ClearScore account.
3. Fix mistakes on your report
Your credit score is based on the information held in your credit report. If this information isn't accurate (e.g. an account appearing as 'open' when it is 'closed') then your credit score won't be either. This could mean your score is lower than it should be. By checking your credit report regularly, you can spot (and fix) any mistakes, which can help boost your credit score.
ClearScore gets your credit report from Equifax, the credit reference agency. So if you find any mistakes on your credit report, you'll need to talk to Equifax directly (which you can do here. You can read more information about this on our FAQ.)
4. Get on the electoral roll
Getting on the electoral roll (also known as the electoral register) can help improve the way you're viewed by lenders, and boost your chances of getting accepted for credit. This is because credit reference agencies are able to verify who you are, which can make you appear more stable to lenders. You can register for the electoral roll here. If you’re not sure if you’re registered, you’ll need to check with your local authority which you can do here.
5. Avoid making multiple credit applications in a short space of time
Every time you make an application for credit, a 'hard search' is carried out on your account and a mark is left on your credit report. If you make too many credit applications in a short space of time, this could negatively impact your credit score, as it makes lenders think you're desperate for credit.
So if you're rejected for credit, try to resist the temptation to apply multiple times. Instead, wait until some time has passed before you apply again. And before you do, check your credit report information is accurate to boost your chances of success.
6. Use an eligibility checker
Avoid getting rejected for credit by using an eligibility check or a 'soft search' before you apply. This means lenders can see some information about your credit history, but it won't affect your credit score (only you can see if a soft search has been carried out on your account).
Eligibility checks show you how likely you are to be accepted for credit before you apply. This means you can avoid applying for products you're unlikely to get, and (in theory) you won't have to make multiple applications before you're successful.
ClearScore’s ‘Offers’ section shows you financial products alongside your eligibility percentage (e.g. 90%). Many credit card providers also offer eligibility checks, which use a soft search to check your likelihood of acceptance. You’re the only one who can see your soft searches, and they don’t affect your score.
7. Get your name on some bills if it isn’t already
Utility bills - such as your mobile phone contract or your gas bill - count as a form of credit. They're a great way to show lenders you can pay your bills back reliably (as long as you pay on time).
If you don't have an account in your name (for example if you're in a house share), you won't get the boost to your credit score, even if you're contributing to the bills. Someone is literally taking the credit for you.
So it might be worth considering putting one or two utility bills in your name, which could help boost your credit score.
8. Pay your bills on time
Forgetting to pay bills can damage your credit score as it suggests to lenders that you struggle to manage your credit well.
To avoid this, you can set up direct debits to pay your utility bills, phone and credit card payments. This means you can relax, and your credit score will be all the better for it.
9. Look out for fraud
Although rare, identity fraud is becoming an increasing problem. If you fall victim, this could potentially damage your credit score, as you become responsible for the credit actions of someone else.
Checking your credit report regularly will help you spot financial fraud quickly. If anyone is trying to open credit in your name, you'll be able to see the early signs in the searches section of your report. This section lists all of the 'hard' credit searches carried out in your name. If there are any hard searches you don't recognise, it could be fraud (though it's always worth double checking with the named lender). You should report any fraudulent activity to Action Fraud.
If you believe you're vulnerable to identity fraud (e.g. you've had your personal information stolen), you can also sign up for the protective registration service from CIFAS. This service (which costs £20 for 2 years) means there'll be extra security checks whenever credit applications are made in your name.
10. Make sure you have a good overall view of your finances
Your credit score is calculated by a credit reference agency (CRA). There are 3 CRAs in the UK – Experian, Equifax and Callcredit.
Each CRA may hold slightly different information about you, which means that you will have 3 different credit scores.
It’s worth checking in with all 3 companies to get a good overall view of your finances. ClearScore shows you your Equifax credit score and report, completely for free. Callcredit’s data can be accessed with a free service called Noddle, and Experian’s data can be accessed for free directly (though their credit report can only be accessed for free on a 1 month trial).
VIDEO: Lily talks you through our top tips to improve your credit score