How to improve your credit score

17/10/22

Credit scores are financial tools that determine whether you will get loans, the interest rates you pay and so much more. Today, these scores have become such a crucial part of our financial lives and has become a metric to measure financial health.

Here are 6 ways you can improve your credit score:

  1. Prove where you live – Register on the electoral roll at your current address . You can do this even if you’re in shared accommodation or living at home with your parents. Registering to vote helps lenders confirm your full name and address which also helps boost your score.
  2. Build credit history – It becomes hard for companies and lenders to assess you with no credit history. Paying for your mobile phone and car tax by direct debit are ways to boost your credit score and build good credit history.
  3. Have a low credit utilisation – Your credit utilisation is the percentage of your credit limit that you use. For instance, if you have a limit of £1000 and you use £500, your utilisation is 50%. It is ideal to have a credit utilisation below 30% for lenders to see you positively.
  4. Make regular payments on time – Paying all your bills in a timely manner is crucial as it will show lenders that you are reliable and can handle credit responsibly.
  5. Check for errors and report any mistakes – Keep checking your credit reports to make sure everything is right and that there are no mistakes, and the information is up to date. Cross check your address and other personal details to make sure they are all right as any mistyped information could affect your score and be enough for a lender to refuse you credit.
  6. Consider getting a credit builder card – A credit builder card can help rebuild your credit score and they usually have low spending limits and higher interest rates. They are very good for people who spend small amounts every month, but you need to pay back on time each month to avoid paying any interest.
  7. Improving your credit score is a process that takes time and will not happen overnight. Each lender may have a different way of checking your credit score depending on their lending criteria and the information they have access to.

If you’re thinking of starting up, it’s worth noting that a Start Up Loan offers a fixed rate interest of 6.19% APR so your interest will not change based on your credit score. However, when applying for this personal loan for business use, it’s good to demonstrate that you have a healthy credit score.

If you need business advice or guidance on how you can make sure you have a healthy credit score before applying for a Start Up Loan, contact the team today through the website.