Improve your credit score
You may already know that when you buy a house, mortgage lenders will look at your score before deciding whether to lend you money. However, you may not know that other providers also check your score before allowing you to purchase their services. For example, if you have a mobile phone on contract, the mobile phone company will check your score. Also if you pay your gas and electricity bills by direct debit, your energy supplier will also check your score.
What is your credit score?You can find out your credit score by checking your credit files or credit report. This is a snapshot of your current credit history and has information in it like how you manage your bank accounts and credit commitments.
Your credit report is kept by credit reference agencies. In the UK there are three main agencies: Callcredit, Equifax and Experian.
You can check your credit report free online with websites like Noddle and Experian. All the agencies are required by law to provide you with a credit report for £2 if you ask for it. You can view this online or get a written copy.
Quick ways to improve your credit scoreAll lenders will have their own conditions, but generally what is bad for one lender is bad for them all.
1. Correct mistakesCheck there aren’t any mistakes on your report, no matter how small. Make sure all your personal details and addresses are correct because any errors can get you rejected by a lender.
Also, check for any information about products you haven’t bought, because this could be a sign of credit fraud (and could count against you!) You can correct mistakes by contacting the credit reference agency.
2. Keep up your debt repaymentsAny large debts you have will have a much bigger, negative impact on your score. However even if you have debts, you can still try to improve your credit score, keeping up your repayments looks better than unpaid debts.
3. Don’t apply for lots of credit in a short space of timeIf you apply for credit with lots of different lenders in a short space of time it can look desperate, and lenders may reject because of this alone.
4. Cancel unused creditIf you have credit or store cards you don’t use anymore, then cancel them. Lenders will check the total amount of credit to which you have access. Therefore, if you have lots of open credit, this can look bad.
If you have unused accounts linked to an address that’s different to your current one, this can cause problems when making applications.
5. Get on the electoral rollBeing on the electoral roll shows stability, which lenders like. Visit your local council website and find out how to get on the electoral roll.
In the same way having the same address and staying with the same employer for a longer period are both positive.