8 Essential Tips for getting your credit score in shape

You could be fooled into thinking that building a credit score’s best left for when you’re fully ‘adulting’? Or when it’s time to lend money or buy a house? Wrong! By the end of this article you’ll have put this common misconception to rest and be well on your way to getting yours in order.  

First of all, there’s no denying that a poor credit score can follow you round like a bad smell, sometimes for as long as up to six years! We’ve all heard it. That’s why it’s important you look at this now and not delay.

Why Does a Credit Score Even Matter?

Scenario: You’re looking to buy a house; you need to borrow money to do so. The person lending to you needs to have confidence that you will be able to pay them back within the agreed time period. That’s where your credit score comes in. Having good credit increases your qualification odds for credit as well as access to some of the best interest rates.

Building your credit report doesn’t mean dashing out to get as many loans and store cards you can get your hands on! There are lots of ways you can build your credit score, some of which are simple and you can action today.

  1. Download a Credit Scoring Application (or, two)

Get your credit report

  • Apps such as ClearScore provide you an easy platform to view and understand your score, as well as useful, personalised pointers for improving it. (We aren’t affiliated with the app, we just like what they offer).
  • Be aware though, lenders can use different platforms so accessing more than one will give you a broader view of your situation.
  1. Find Out What’s Letting Your Score Down
  • Mistakes happen in reports. The good news is they’re pretty easy to rectify. Get in touch with the credit reference agency (ClearScore use Equifax) to correct these errors and be prepared to provide evidence.
  • Electoral roll? Make sure you are on it. This helps referencing agencies to verify your identity.
  • Are you paying your bills on time? Don’t let your accounts fall into arrears - setting up a direct debit is the easiest way to make sure your bills are automatically paid on time.
  1. Check your Eligibility First

Applying for credit involves a ‘hard search’ of your credit report, which gets noted on the report itself regardless of whether you’re accepted or not and can bring your score down. Use an eligibility check before you take out credit to help you choose option’s you’re most likely to be accepted for-minus the dreaded hard searches.

  1. Make and Pay Off Small Spends on a Credit Card or Overdraft
  • Spend a small amount of money consistently each month, and pay the bill off in full when your statement arrives. This way lenders will be more willing to trust you to pay back the money borrowed.
  • Carrying balance over each month however, should be avoided, it will incur you interest charges, negatively impacting your score.
  1. Don’t Overuse your Credit Facility

Don’t get tempted to spend all of the credit you have at your disposal – aim to use no more than 25%. Blowing everything you have access to will be a sure signal to your lender on how trusted you can be with credit in the future…and not in a good way!

  1. Get Accounts in Your Own Name

This might seem like a lot of responsibility if living in a shared house, but paying bills under your name can largely help? Consider splitting the bills up between your housemates, or ensuring your phone bill is in your name.

  1. Don’t Make Lots of Applications in one go
  • You’ll want to leave around 6 months between credit applications to keep your credit score stable.
  • Your score might drop when you first apply for credit, but don’t worry, it should pick back up again after a few months of proper use.
  • Building up your available credit may be hard with your first credit card or overdraft, but increasing the limit further down the line will become possible with good habits.
  1. Monitor Your Report Regularly

And lastly, building a credit score takes time. The more you use credit and pay it back on time, the more your score shall improve.

FAQ

What is considered a good credit score?

ClearScore’s range is from 0-700, with anything above 380 considered being on good ground. Experian provide a score between 0-999 and consider a 'good' score to be anywhere between 881 and 960.

What credit score is needed to buy a house?

Unfortunately, there isn’t a magic number and there are also other factors at play but fundamentally, the higher your score, the better chance you have of getting the mortgage you want.

Do I need a credit card to boost my credit score?

No, if you’re adverse to the use of credit cards, there are other ways you can show lender you can be trusted with credit, such as making regular payments to mobile phone contracts or utility bills.

Will checking my score effect my rating?

No, checking your credit score is considered a ‘soft enquiry’ and won’t affect your credit.