5 steps to improve your credit score

Whether you’re planning on making a credit application or just want to make sure everything’s in order, it’s worth checking your credit report.

Your credit score is the tool you need to measure your credit health and get an idea of how lenders might respond when you submit an application.

It can seem a little daunting, but we’ve got you covered. Let’s take a look at the main factors that affect your score, some strategies to try and improve it, and what’s best avoided. After all, the best place to start making improvements to your report is by getting familiar with what’s in it.

Put simply, the higher your credit score, the better your chances of finding a ‘good deal’ when trying to borrow money. A good credit score can be a sign that you’re using a mix of credit types, staying on top of your repayments, and steering clear of behaviours that can bring your score down. This is all music to the ears of lenders when they’re reviewing a credit application.

Nobody’s perfect – well, getting a perfect score is rare – but it’s possible to boost your credit health over time. Here’s how you can get things moving in the right direction, no matter what your score is right now.

1. Keep on top of your repayments

Making payments on time with your existing accounts is the most reliable way to grow your score. Consider setting up a direct debit for your repayments – this is a really easy way to pay your bills and removes the need to remember when they’re due. Not only will this help you avoid any notices or penalties from your lenders, but it also demonstrates that you’re responsible with credit.

2. Stay credit active

If you’re not using credit, you’re missing the opportunity to show a lender what you can do. Put yourself in their shoes – if they can’t see examples of positive repayment behaviour from you, they won’t be able to assess how you manage credit. You need to use credit to build your credit score, but always make sure you can afford to make the repayments on time.

3. Keep an eye on your CUR

Your Credit Utilisation Rate (CUR) shows your appetite for credit. But don’t go overboard; too high and you may look dependent on it, too low and a lender might not be able to see that you can use credit responsibly. Around 30% can be beneficial to your credit health.

4. Get on the Electoral Roll

If you can’t see an Electoral Roll listing on your credit report, it’s likely a lender won’t be able to see your credit history. This is because your information is normally connected to your Electoral Roll listing – making it easier for lenders to process your application and faster to verify your details. If a lender can’t find a listing for you, they might decline you on that basis alone. Registering on the Electoral Roll is one of the easiest ways to make a difference to your credit report.

5. Check your report

Make sure everything is accurate, up to date, and nothing is missing. If it doesn’t look right, chances are your credit report isn’t either. Your Checkmyfile report is the most detailed report you can get – showing everything that’s held by Experian, Equifax, and TransUnion in one place – which makes cross-checking very easy.

Showing off your credit management is crucial when trying to improve your score. But it’s also important to try and avoid anything that could potentially cancel out your hard work.

• Arrears, defaults, and court and insolvency information are all examples of negative payment history that could hit your credit score hard. They won’t be there forever, but they’re best avoided where possible as they can affect you for up to six years.

• Lots of credit applications in a short time can affect your score. If you look like you urgently need credit, lenders may see you as a higher risk.

• Closing accounts can temporarily affect your score as you’re reducing your credit activity. While the payment history built up on the account will still show, lenders won’t be able to see how you’re handling your credit in your current circumstances.

If you’re confident there’s a solid tick next to points 1-5, you’re on your way to improving your credit health. And remember, your score doesn’t need to be perfect to get the credit product you need. Knowing it is the first step to growing it.