Before you go about improving your credit score, it is important that you understand your credit score and how it works. Read to know all about the credit score.
Check your credit score
You can check your credit score and report on Experian for free. After you open the website, go on ‘Get your free score’, and it will help you understand what credit accounts you have. A credit account comprises credit card, personal loan, mortgage, overdraft on your account, etc., all of which, contribute to your Experian credit score. It is suggested to use Experian because a vast majority of UK lenders use the scoring of Experian while approving applications or appraising them.
Understand your score
You will get your score from 999 and your score can come in any of the five categories, which will help decide how good or how bad it is. For instance, if your score falls under the top 2 categories, which means either excellent or good, then the chances of you getting through a credit application are very good. However, if unfortunately, you get the score of fair or below then chances of you getting through a credit application are very limited. If you get fair you may be approved, however, you won’t get a very good rate. For example, with excellent, you can get rates as low as 3.8% because in the UK the interest rate is very low when compared globally. If your score is poor or very poor then it is better to not send your application right now and wait till you get your credit score sorted.
Look through all of your credit accounts and searches
You can download your credit report or view it on Experian itself, however, it is suggested that you download it because you will have to look through all of your credit accounts while concentrating on reports of the last 6 months. Experian will tell you if they were hard searches, which means they will negatively impact your score or soft searches. For example, when you renew our car insurance there are many soft searches on our account, which don’t affect your score. If there are 1-2 hard searches in a month they will have a negative impact, so, it is better to stop and wait for 6 months before making a new application. Moreover, if you did not make the search or you were not sure that it was a hard search contact the company and ask for that search to removed from your credit report. If there is a genuine reason or there has been an error, the company might remove it from your credit report.
Check your details,
On the report, check your address, name, are you on the electoral roll, and whether your address correct. It does not matter whether you stay with your partner, parents, etc., if you are above 16, you should be on the electoral roll. You can easily boost your score by 50-60% by making sure all the details are correct.
Rectify any late payments in the last -12 months
Look through and see if there are any late payments in 6-12 months as they will have a negative impact. Find about the payment and try to remember why it was late and think of a strategy to get it removed. You can contact the lender and request them to get it removed if it was just one time the payment was missed. You can even contact Experian help and request them to remove the late payment citing it as an inaccuracy. Experian will then either contact the lender or ask you to contact them accordingly. Moreover, for the future remember than there must be no late payments if you are planning to send an application. Moreover, if say there is a late payment, which was four months back, you can wait for two months as after six months, it will have very little impact on your credit score.
Having credit not in use increases the score
Yes, it is true and the use of your revolving credit is checked for your score. The revolving credit includes credit cards, overdrafts, etc, which can be used anytime. For instance, if you have a 5000 £ overdraft, which you are not using, this means you 5000 £ worth of credit available to you. This credit looks good for lenders as they will know you will not miss the payment if you have access to 5000 £.
Use of revolving credit
The lenders want to see that you don’t have much revolving credit, which you can do by temporarily reducing it till you do the application. This will make sure that you get the best lender and the best rate and best rate.