BOOSTING your credit score can give you a better chance of landing a decent mortgage or loan.
Credit ratings expert James Jones has revealed the quick tricks that could take just half an hour to sort but could have a long lasting impact on your score.
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Your credit score is a vital piece of financial information that lenders use when considering applications for products such as loans, mortgages and credit cards.
The score is compiled by credit reference agencies such as Experian, Equifax an TransUnion.
These companies compile information based on your financial history and how good you are at repaying credit such as mortgages and credit cards.
Each reference agency has its own scoring system based on your financial data and how good you are at managing your debts.
Ratings usually range from poor to good, very good or excellent.
Ultimately, those who pay their bills on time will get the highest scores but the figure can also be affected if there are mistakes on your report or by other factors such as if you make multiple applications for credit.
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Lenders will use this data and your score to decide if they are comfortable lending to you and how much interest to charge.
Bad marks such as if you fall behind on repayments or are made bankrupt can harm your score and stay on your credit report for six years.
But Jones, head of consumer affairs at Experian, says there are quick and easy changes you can make to boost your credit score and increase your chances of getting affordable finance.
He told The Sun: “Lifting your score by even a single score band, for example from fair to good, can give you access to a much wider selection of credit products and, importantly, at lower rates.
“So spending a little time on your credit score right now can pay handsome dividends in the future.”
Check your report
Jones suggests keeping a regular eye on your report so you can spot any mistakes such as if a loan is shown as unpaid or if your address is wrong.
It will list all the bank accounts and credit you have so you can see if there are errors and contact the credit reference agency to get them fixed.
Experian has a free service to check your score online but if you want to check your report itself, you can only do this for free using a 30-day trial, after which you’ll be charged £14.99 a month.
Equifax lets you check your score and report for free for the first 30 days, after which it’s £7.95 a month.
TransUnion’s Credit Karma service gives you free access to your report and score for life.
Each reference agency will have different data and scoring systems so it is worth getting them all checked as you won’t know which one your bank is using.
What do Experian credit scores mean?
EXPERIAN’S credit scores range from zero to 999, here is what each score means.
Very Poor: 0 – 560
Poor: 561 – 720
Fair: 721 – 880
Good: 881 – 960
Excellent: 961 – 999
Register on the electoral roll
Registering to vote may not have anything to do with your finances but it is important for your credit report.
It helps banks verify your identity when considering an application for credit and Jones says it can boost your score.
He explains: “Your credit report includes voter registration records to help lenders confirm your name, address and residential history.
“Getting registered can increase your Experian credit score by around 50 points and you can sign up very quickly via your local council’s website. The information usually feeds through to your credit report within about a month.”
Find out where to register to vote at Gov.uk.
Reduce existing card balances
Lenders want to see evidence that you can manage your debts and may be nervous if you are often close to your credit limit and appear reliant on cards and overdrafts.
Jones says keeping your card balances to no more than 30% of each card’s limit can lift your Experian score by a massive 90 points.
He says: “Lower balances show lenders you’re not over-reliant on credit.
“If you have some spare money then paying down existing balances can give your score a welcome boost.
“Bear in mind this type of information is refreshed on your report once a month.”
Set up direct debits
Jones warns that missed credit card repayments can reduce your score by 130 points.
It only takes a few minutes to setup direct debits through online banking to pay your bill each month.
This will ensure you can clear your balance automatically without having to remember every time the credit card bill arrives.
Jones says: “Making manual monthly payments to loans and credit cards can make you feel in more control of things, but forget a regular payment and your credit score could plummet.
“A single recently-missed payment can reduce your Experian score by 130 points. I recommend setting up direct debits for all your regular payments to avoid future hiccups.”
Break financial ties
Any joint accounts you open with a partner will show on your credit report and links you both financially in the eyes of a lender.
This means that even if you are no longer together, the other’s person’s credit history can impact your applications if the accounts are still open.
Jones suggests submitting a “financial disassociation” on each of the three main credit reference agency websites, which takes a few minutes and will break any financial links on your report.
Register for a boost
Repaying debts on time can build up your score but that can be hard if you haven’t had credit cards for long or you are renting so don’t have a mortgage.
There are ways to boost your score by showing you can pay other contracts on time.
Experian has a Boost service that Jones says can raise your credit score by up to 101 points.
It does this by connecting your bank account to your Experian score calculation and uses open banking technology to record payments to council tax, streaming services such as Netflix and Spotify and to savings accounts.
Tenants can also sign up to services such as Canopy and CreditLadder that record your rental payments to help boost your score.
A poor credit score can add £262 a month to your mortgage repayments but there are ways that you can improve it to get a better deal.
See how paying for Netflix could improve your credit score.
Also, Monzo customers can now check their credit score for free on the app.
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