21 Tips to Improve Your Credit Score

Building a solid credit rating is one of the most crucial things you could do in life. It affects your future in more ways than you think, and although you might scoff at the idea of borrowing money, just think of the necessary times that you actually have to do it. Whether it’s buying a house, paying for a car or even going back to university, there are many situations in life where borrowing money is necessary. When the time comes, you’ll want to have a solid credit rating score to help you get the best rates and actually be accepted for a loan.

To help you out, we’ve prepared 21 tips to help you improve your credit score.

1. Make sure you actually have a credit rating

Firstly, make sure you have some kind of credit score. If you’ve never borrowed money, never used a credit card, never taken something out on finance, then you owe it to yourself to actually start doing it. While it seems strange to take out a loan for something you can pay for one go, remember that you actually need to build a credit rating and you can only do this by having some history of borrowing.

2. Companies predict your credit rating

It’s not just the history of your credit which gives you a rating, but also your behaviour. Lenders will use your data to predict how you use your money, and this can drastically affect your rating. In short, practice good habits and don’t let bad financial habits take over–your lenders will know.

3. All lenders are different,

keep this in mind There’s no such thing as a universal credit rating. Everyone will give you a different rating and you need to look at several different lenders if you’re being rejected by one or another.

4. Lenders want to make money from you

If you have a perfect credit rating and make payments before interest occurs, why would a lender give you money? They want to make money from you, and that’s why someone with a perfect credit score will often be rejected.

5. Not all rates are equal

If a lender advertises a “representative” before APR, then it means they have to give a minimum of 51 percent of accepted customers the advertised rate. The other 49% might pay more, so always check the real rate you’re being offered.

6. Limit your applications

“Shopping around” is common for people looking for the best interest rates. While it can find you a better deal, it also reflects on your record and you may be rejected for applying to too many lenders in a short time.

7. Find your chance of being accepted

There are many eligibility checkers online to help you determine your chances of success. By checking your chances in advance, you can limit the number of applications you hand out.

8. Make your applications consistent

Lenders use several different anti-fraud measures to discover problems in your application. Your records will be scoured to see if you have a record of fraud, and if you apply with inconsistent details, it will hurt your chances of a successful application.

9. Try and avoid paid credit score sites

Most of these sites can only give you a vague indication of your credit score and aren’t indicative of your success rate or chances of applying for a loan.

10. Building a credit rating costs money

If you pay 0% interest all the time on money you borrow then you can get a perfect credit score. However, this isn’t exactly desirable because it shows that lenders can’t make money from you. The better alternative is to actually let some interest accumulate to show that lenders can actually make some money off you, increasing your chances of being accepted.

11. Companies see your credit rating differently

Different lenders want different things from your credit score. What makes you attractive to one type of lender might not have an effect on other lenders. This means that rejection from one lender might not mean a universal rejection from all lenders.

12. Be patient with your applications

If you’ve recently been rejected, make sure you double-check your file to see if there are any problems or errors. If there are, don’t immediately resubmit it. Wait a while, try and boost your credit score, then try again.

13. Try avoid using more than one Short term lender

Short term loans can help boost your credit rating if you’ve had poor past habits and already have a terrible credit history. However, using several different lenders at any one time can be an indication to other lenders that you cannot manage your finances. You can compare the price of short term loans here.

14. Avoid credit-card cash withdrawals

For the same reason as limiting the number of short term lenders you use, avoid withdrawing cash with your credit card. Again, it’s an indication that you’re bad at managing your money and must be avoided.

15. Timing is everything

Issues like bankruptcy can leave a stain on your record for up to six years. Wait for existing applications and problems to expire before making another one.

16. Use a credit card as your main source of credit building

Credit cards are fantastic for building credit if used correctly. Use a bit each month to pay for your more expensive purchases, and make sure you pay in full at the end of each month.

17. Consider credit rebuilding cards

Although these have horrible 25-50 percent APR's, they’re great for building up your credit rating if you’ve had a poor financial history and a low credit score.

18. Verify you’re on the electoral register

Many people forget this, but it can give you a small boost to your credit score.

19. Don’t make late repayments

Obvious but underrated. Make sure you pay back all of your credit repayments on time.

20. Your partner can affect your credit rating

If you have a joint account, loan or share utilities, then make sure your partner (or even roommate) does their share to help out so that you don’t look worse.

21. Cancel cards you don’t use

Be it store cards or credit cards you used to rack up points, cancel the ones you don’t use. Having too much unused credit can be a bad thing.