Once you know how to check your credit score, it can become easier to identify ways to boost it. Discover the best ways to boost your credit score to help with future loan and other finance applications.
Your credit score helps lenders decide your creditworthiness when you apply for loans or other types of finance like a mortgage. A higher score means you are seen as more likely to make repayments, while a low credit score may be seen as a red flag by many lenders. So, actively taking steps to improve your credit score may increase your chances of having a loan application accepted. Let’s look at some of the best ways to boost credit scores and why it’s crucial to do so.
What you’ll learn:
- What is a credit score?
- Why do you need a good credit score?
- How to check your credit score
- How to improve your credit score fast
- How Norton Finance can help
What is a credit score?
A credit score is a number which determines the likelihood that you will repay any owed debts through a loan, mortgage or other financing options. In other words, a higher credit score makes you a more trustworthy option to lenders, as they see your score as a show of creditworthiness – a signal that you will make loan repayments on time and in full.
Not everyone will have a credit score. There are a few reasons why you might be considered “credit invisible” and have no tangible information to generate a score. If you are under 18 years old, you won’t have a credit score. Similarly, if you have recently moved to the UK, it will take some time for your UK credit report to be generated.
Your individual credit score will look different depending on which of the three credit referencing agencies you are looking at. Credit scores are fluid and typically update within a 30-day period.
Why do you need a good credit score?
When applying for a loan, your credit score will be used as one of the deciding factors on the success of your application or the favourability of the loan’s interest rates. A better credit score shows to lenders that you are financially trustworthy. Therefore, it’s likely you are seen as a responsible borrower who will make punctual repayments in full. Having a good credit score may:
- Improve chances of being accepted for a loan
- Allow for higher borrowing limits on loans and credit cards
- Provide more favourable interest rates for borrowing
- Make it easier to rent a property
- Widen choice of mortgage providers
A poor credit score may result from financial issues in your credit report history, such as multiple rejected loan applications, having a CCJ or defaulting on a loan. The potential consequences of a poor credit score are:
- Significantly decreased borrowing limits
- Increased likelihood for loan application rejection
- Higher interest rates on any finance options
- Minimal options for unsecured loans
Note that your credit score may show as being ‘fair’ if you haven’t had a loan, credit card or other financial borrowing – this is because the credit reference agencies (CRAs) have no credit history to accurately calculate your score.
How to check your credit score
There are three major credit reference agencies (CRAs) in the UK – Experian, Equifax, and TransUnion. Each CRA calculates and regularly updates your credit score and credit report based on your financial history and current activity. You can check your credit score for free from any of the three CRAs, but check the details used to register are accurate to ensure you are provided accurate information.
Once you have signed up, you will be able to see your credit score. Your score will fluctuate over time, so taking steps to improve your credit score should help you with future loan and financing applications. Many lenders will check your credit score before deciding on your application. Your credit score may also change depending on whether a ‘hard’ or ‘soft’ check of your financial history has been carried out.
How to improve your credit score fast
Credit scores do not drastically change overnight – but it’ll pay to take the right steps to make a positive impact. Credit scores typically update every month, but significant issues such as CCJs, defaults or bankruptcy will be evident on your credit report for at least six years.
Let’s first look at a few of the quickest and best ways to boost your credit score:
- Ensure you’re on the electoral register: One of the fastest ways to boost your credit score is registering to vote. Doing this allows CRAs to confirm your registered name and address and consequently add credibility to your credit report.
- Check your credit report for errors: You can request to see your credit report for free from the three CRAs. When you do this, ensure your financial information and history is correct as errors could affect your credit score. Check for things like errors in previously missed loan repayments, joint accounts that are no longer relevant and incorrect addresses.
- Fix credit report errors: If you have checked your credit report and noticed an error, this will need to be disputed. Provided you have evidence to dispute any wrong information, the error will be removed and no longer impact your credit score.
There are some longer-term tips to help boost your credit score over time, such as:
- Keeping applications for credit to a minimum: Making several applications for loans, credit cards or mortgages will give lenders the impression that you have difficulties managing your finances. Rejected or repeated applications will negatively affect your credit score.
- Build up positive credit history: If you have existing loans, ensure you repay debts on time and in full. If you are having difficulty making repayments, speak with a financial advisor or the lender as soon as possible. Consolidating your debt could help with repayments and slowly contribute to improving your credit score in the long term.
- Responsibly use various credit options: Making repayments for a variety of credit options shows to lenders you’re able to balance multiple streams of borrowing. This could be credit cards, phone contracts, loans and a mortgage. The important thing is to make repayments on time to demonstrate financial responsibility.
How Norton Finance can help
A poor credit score doesn’t necessarily mean there are no loan options available for you. Our experts at Norton Finance work closely with you to find the best loan options to suit your financial circumstances. By searching the market for you, we can help guide you in the direction of flexible and affordable solutions.
We’ll start with a few important and quick questions to establish appropriate loans and loan types for you. We’ll also carry out a soft credit search, so your credit score won’t be affected. Get started with Norton Finance today by calling or getting an online quote.
Looking to learn more about credit scores or loan types? Our handy Know How blogs have it covered.
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