How to improve your credit rating and check your credit score for free
YOUR credit score can have a huge impact on you getting the best credit card, mortgage and loan deals.
But how can you check your credit rating and how can you improve it? We explain all you need to know.
What are Credit Reference Agencies?
So-called "Credit Reference Agencies"(CRAs) compile information on how well you manage credit and make your payments.
In the UK, there are three main CRAs:
- Experian
- Equifax
- TransUnion (formerly Callcredit)
All three firms hold data on your financial history.
These details include your bank accounts, any credit cards or loans you have and the debt associated with them, any late payments you've made, any County Court Judgements (CCJs) made against you or if you've been declared bankrupt.
You also have a legal right to request a statutory report on data that credit reference agencies hold on you but this won't include your score. You can usually apply for this on a credit reference agency's website or by post for free.
How can you improve your credit score?
While there is no credit blacklist which bans people from any sort of borrowing at all - if you have struggled in the past you may find lenders won't consider you.
If that's the case then there are steps which you take to help improve your rating:
- Get on the electoral register - This proves who you are and where you live meaning it's easier to get credit if you're on the list. Also check the electoral role for any errors. You can sign up by .
- Don't make too many credit applications - Making lots of requests in a short period of time can be seen as a sign of financial distress - and each application will be recorded on your file. Use a "soft-search" eligibility calculator to show how likely you are to be accepted.
- Always pay your bills - Late payments are also recorded in your file so make sure you pay your monthly bills on time including utility and credit cards.
- Pay down your debt - Try and cut down your existing debt before applying for new credit as lenders may be reluctant to lend to you if you already a large amount of debt.
- Use a credit-builder credit card - These cards tend to have high interest rates compared to normal cards but if you can show you're a responsible spender with them, it can improve your chances in the eyes of lenders.
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.