How to improve my credit rating

Make sure you’re registered to vote

Making sure that you’re on the electoral roll is a quick and easy way to prove your address and boost your credit rating. You can get on the electoral register via the Government website. It also helps if you have lived in the same place for a good period of time, so avoiding frequent moves is a good idea if possible.

Make payments on time

This sounds obvious, but some people don’t realise that even just being late for a single payment on a credit card can have an adverse effect on your credit score. If you are worried that you’re going to miss a payment, contact your lender in advance of the payment due date to see if you can make an arrangement to pay a lower amount. The very worst thing you can do is ignore the issue and hope it won’t matter - it will.

Look at your credit utilisation ratio

Your credit utilisation ratio is the amount of credit you are using, as a percentage of the amount you are able to borrow. For example, if you have one credit card with a credit limit of £2,000 and you currently have a balance of £400, your credit utilisation ratio would be 20%.

Lenders prefer to see low credit utilisation ratios as this is a sign of responsible borrowing. ‘Maxing out’ credit cards can give the impression that you might be a reckless spender or unable to manage your credit facility well. Try to get the percentage down - ideally to below 30% - and this should help to boost your credit score.

Avoid opening and closing accounts

Every time you apply for credit and a lender runs a search on your credit file, this can knock down your credit score. If you make an application that’s declined, this can have even more of an impact. If you know you want to improve your credit score, it’s good to avoid anything that could trigger a search.

It’s worth noting that checking your own credit report does not impact your credit rating in the same way as if other people check it. You can look at your own credit history as often as you like, through as many agencies as you like, and your score will remain unchanged.

Similarly, don’t be tempted to start cancelling credit cards thinking that will help your score. Lenders like to see well-established credit accounts, as this shows consistency and reliability. If you’re worried about inactivity on credit cards, you could start using them for a specific item, such as grocery shopping, and then paying them off in full at the end of every month.

Look at financial links with other people

If you have linked finances, for example a joint loan with a partner, it’s not just your credit history that comes into play - their finances will be connected to yours as well. If they have had their own credit issues in the past then this could have a knock-on effect on your rating and, as unfair as it feels, your score could be lower as a result.

If this sounds familiar, then the best thing to do is to end these links wherever possible. It’s not always easy to break financial connections with someone, but it could have a positive impact on your credit rating if you can.

Investigate a credit-builder credit card

While you might think that having no credit at all would equate to a high credit score, it’s actually not the case. If you’ve been resisting taking out a loan or cards for this reason, then you may have been doing yourself a disservice. Having some credit and managing it well is actually a good way to show lenders that you are a responsible borrower as it provides evidence of your being able to make payments on time.

If you’re not eligible to take out a regular credit card, you could consider a credit-builder credit card, designed especially for people with bad credit or a low income. They tend to have low limits and high interest rates, so they’re not cheap, but ideally you’ll be using them moderately and paying in full every month, so won’t be affected by the rate.

Use the Rental Exchange scheme

Typically credit reference agencies only hold information about credit accounts like loans and mortgages, but it is sometimes possible to add additional information to try and show your creditworthiness. Experian has set up the Rental Exchange, a scheme designed to tackle inequalities between homeowners and tenants, that does just this.

As part of the scheme, tenants can ask their landlords to submit details of their rental payments to Experian, who can then use this information to enhance your credit rating. Only do this of course if you are confident about paying your rent on time every month.

Try Experian Boost

If the idea of having other non-credit payments recorded on your credit profile appeals, then you might want to give Experian Boost a try. It works in a similar way to the Rental Exchange, but has a much broader remit. Experian uses Open Banking, (with your full consent), to pull in information from your day-to-day banking, so things like council tax payments and subscription services like Spotify and Netflix can be included.

While these aren’t debts in the same way that a loan or credit card is, they can still show that you’re able to maintain a regular monthly payment and are therefore evidence of responsible financial behaviour.