Five Tips to Help Improve Your Credit Score

Credit, whether we like it or not, is an integral part of modern life. From mortgages to personal loans, credit cards to mobile phone contracts, at some point or another, we all need to rely on credit. For the majority of people who have a stable income and a healthy credit history, obtaining credit is a piece of cake. However, for individuals with no credit history or those trying to rebuild their credit score, it can be a different story altogether.

The good news is that your credit score is changeable and can, therefore, be improved. Consider the following five tips to help improve your credit score.

1. Check your credit file

There are three main credit reference agencies (Equifax, Experian and CallCredit) that hold all the details of your credit file. Through these companies you can gain access to your information. Your personal details, financial relationships, defaults, late payments, credit limits - the whole shebang is listed on these sites, so ensure that every detail is correct.

You can add notes in certain circumstances, especially if you are disputing a late payment, or need to explain a change of circumstances. A statutory credit report can be requested via post for only £2, or you can sign up to one of the credit reference agency’s online services to gain instant access.

2. Get on the electoral roll

This is one of the most basic steps to take when trying to rebuild your credit score. Contact your local authority for details on how to register and do it ASAP!

3. Something is better than nothing

Having no credit history can be just as damaging as having bad credit history. Sign up to a monthly mobile phone contract or obtain a credit card designed for people with low credit scores to help build a credit history. Companies need to know you can manage credit and they can only see this if there is evidence – so create some for them!

4. Piggyback

It is possible to piggyback off someone else’s credit score. If you are over 18 and live with parents or a partner, you can create a financial relationship with them. This is particularly useful if they have good credit. However, it is also vital to sever financial relations with ex-partners, so check your credit report for details.

5. Pay on time and do not get greedy

Ensure you pay your debts on time. Missed payments kill credit scores, staying on file for up to six years. Use direct debits where possible, but if you know you cannot make a payment, cancel the direct debit in advance and speak to the company about alternative arrangements. Companies also look unfavourably at maxed out credit cards, so try to keep borrowing down as much as possible.

Also, beware of credit 'footprints'. Apply for credit too often and you will seem desperate – credit companies do not like this! If you get turned down ask why, do not just try to borrow elsewhere.

This article was written by Wonga, leading providers of online loans.

For additional information on credit cards or related topics please visit our library of credit card articles.