BOOSTING your credit score is an easy way to improve your chances of getting a good mortgage or decent loan.
Credit experts say lenders are tightening their criteria, making it tougher for you to prove you’re able to pay back the cash.
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Your credit score is an important bit of financial information that lenders for products like mortgages, loans and credit cards use to decide if you’re eligible.
There are three main credit reference agencies that compile your score, called Experian, Equifax and TransUnion.
They will pull together information from your financial history and repayment record of previous credit borrowing.
Each of the reference agencies will have its own points system to base its score on, using your financial data and how good you are at managing your debts.
Ratings usually range from poor to good, very good or excellent.
Essentially, if you pay your bills on time you’ll have a high score, but other factors can influence it such as applications for credit or having outstanding balances.
Having a decent credit score is important if you’re looking to take out a loan, a mortgage or a credit card.
Lenders will use the data collected to choose if they feel comfortable lending to you and how much interest they’ll charge you over the course of the loan.
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James Jones, head of consumer affairs at Experian, said it’s recently seeing evidence that lenders are tightening their criteria.
This is likely due to increased numbers of people taking out credit due to rising costs and bills.
James said: “It’s really worth spending some time on improving your credit score.
“The higher your score, the more chance you have of being accepted for credit and also securing the best deals, which can obviously be a huge help to many of us at the moment.
“A great first step is to check where you stand right now, which is why we give everyone free access to their Experian score.
“Fortunately, there are several ways you may be able to improve your score.”
The Sun spoke to James about the best ways to boost your credit score and some of them take just minutes.
He also explained how many Experian points each would add towards your overall score.
Register on the electoral roll – 50 pts
Registering to vote can actually help improve your credit report.
It helps banks verify your identity when considering an application for credit and Jones said it can boost your score.
For Experian, being signed up to this can get you 50 points and it usually feeds through to your credit report in about a month.
It only takes a few minutes and you can do it through your council’s website.
Head over to the gov.uk website to find out where you need to register.
Limit applications for new credit – 50 pts
Taking out several applications for credit can negatively impact your score.
That’s because applying for multiple deals to increase the likelihood of being accepted can make you look financially desperate.
James said: “Space out any credit applications you make and shop around using eligibility-checking services.
“That way, you’ll only apply for deals you’re likely to get and avoid collecting multiple ‘hard’ search footprints.”
Not applying for any new credit for six months can boost your Experian score by 50 points.
Reduce existing card balances – 90pts
Keeping an eye on your credit card balances can also increase your score.
James said that by keeping your card balances to no more than 30% of their limit, you could boost your score by a whopping 90 points.
For example, if you have spent £800 of a £1,000 limit then that’s 80% which would reflect negatively.
He explained: “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.”
If you have a really higher percentage then you could end up losing points.
Register for a Boost – 101 pts
If you’re someone who makes regular payments like council tax, or Netflix and Spotify, or into savings accounts – you could boost your score by 101 points.
Experian offers customers a Boost service that connects their bank accounts to their Experian score.
It’s free to sign up and James said that two thirds of people who sign up end up boosting their score.
He said: “You can sign up for Experian Boost in minutes.
“Your score will not decrease and around two thirds of customers see instant score improvement.”
This might be particularly helpful for young people who don’t have as many outgoings themselves because they live at home, for example.
It expands the pool of what lenders can look at, increasing your chances of getting a loan.
Set up direct debits – 130 pts
If you’re manually making payments to cover your phone, gym, or energy bill every month you risk plummeting your score.
Forgetting or missing just one payment could see your Experian score plunge by 130 points.
One of the easiest ways to avoid this and boost your score is by setting up direct debits.
This shows that you’re financially reliable enough to pay the cash every month.
James said direct debits are a good way to avoid “future hiccups”.
Challenge any inaccurate defaults – 250 to 300 pts
The next tip to boost your score may not apply to everyone but it can seriously affect your record if it does.
Having any court judgments or credit defaults against you can be very bad news for credit scores.
Have either one and you could see your score reduced by 250-350 points.
If you have one of these or it was registered unfairly, such as if you missed a bill because you moved house, then you can take steps to challenge it by contacting the lender or court.
James said that you can also ask credit reference agencies for help.
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.
So if they are behaving irresponsibly after you go your separate ways then it could reflect badly on you.
James recommends filing what’s called a “financial disassociation” which will cut all ties.
He said: “You can submit a ‘financial disassociation’ on each of the three main credit reference agency’s websites in just a few minutes, which once actioned will sever any link.”
Why is it important to boost your credit score at the moment?
With lenders tightening their criteria lately, it is important to put yourself in the best position, James said.
He explained: “In terms of credit scores, this probably means raising the pass-mark rather than altering how much impact individual factors have.
“So, in that respect, none of the example factors are likely to have become any more important.
“The key is getting your credit score as high as possible to give yourself the best chance of getting over the finish line, wherever it’s set.”
Another trend that is being seen across the board is lenders looking more closely at affordability.
This is because rising costs are causing them to question your ability to take on a loan, based on your regular income and spending.
“As well as your credit score, credit report data also helps lenders assess affordability, including your existing level of borrowing,” James said.
He explained this means that reducing existing card balances may be even more important now because high levels of current borrowing mean less money available to service other credit.
You basically don’t want to look like your finances are squeezed and increasingly reliant on lines of credit.
James said: “Connected to this, I would say applications for new credit might also attract more scrutiny now as the number of recent hard credit checks tells a story about your hunger for credit.”
Meanwhile, here are six things you should never buy on a credit card – and three you should.
Plus, a Sun reporter boosted his credit score from good to excellent in three months using an easy trick.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
