How to improve your credit score in 2022

Credit scores are completely free and simple to check. The three main credit reference agencies in the UK – and from which you can obtain credit reports – are Experian, Equifax, and TransUnion, and Money Saving Expert recommends that you check reports from all three companies once a year.

But what happens if you find out that you have a bad credit score? Here are 10 tips for helping to improve your credit score over the coming 12 months.

1. Build up a credit history

If you haven’t got any loans, mortgages, or credit cards, you might think that you have a good credit score, right? However, a credit score shows how good you are at repaying a loan, and if you don’t have one, you can’t show how good you are at paying it back!

Even if you have a bad credit score, you should still build up a credit history, proving that you can repay your loans. For example, Car Finance Genie offer car finance to customers with bad credit, so taking out a car finance deal and successfully paying this off over time could help improve your credit score.

1. Make all repayments on time

Always ensure that repayments are made on time. If you are struggling, it is always better to get in touch with the lender and discuss what options you may have to alter your repayment plan. If you miss a payment repeatedly, this can significantly impact your credit score.

1. Don’t just make the minimum repayment

When financially possible, pay back more than you have to. This will show lenders that you have the capital available to pay back your debts.

1. Keep usage as low as possible 

Only use the minimum credit that you need to, keeping your available credit as high as possible. This will show that you are good at managing your money, proving to lenders that you will be able to pay them back. A good rule of thumb is to only use around a third of your credit limit.

1. Ensure that you aren’t linked to any associates financially

 If you have only ever cohabited with someone, such as in a common law relationship, then this step might not apply to you. However, if you have ever held a joint account with someone, such as a partner, spouse, business partner, or flatmate, then their actions alone can impact your credit score.

Get in touch with all credit reference agencies to sever these links if you no longer work with, live with, or are married to one another.

1. Pay off your debts

Do you owe some money to your utility providers for things such as electricity and gas? Do you have a lot of credit card loans? Are you missing repayments on ‘buy now, pay later’ items? Then pay off your debts as soon as possible. This will show up on your credit score that you paid off your debts, signalling the end of your bad financial behaviour.

1. Don’t apply for lots of things at once

If you have been rejected from taking out a loan, credit card, or mortgage, don’t just keep applying again and again. Lenders will be able to see how many times you have applied, and so multiple applications can suggest you are financially unstable, and thus less likely to pay back any credit.

1. When you do apply, ask for soft searches

When you undergo a hard credit search, this will appear on your record, and so other potential lenders will be able to see that you applied for, and were maybe rejected from taking out other loans. Although asking for soft searches will not increase your credit score, it will at least protect it while you find the right lender.

1. Register to vote

Registering to vote might seem an unlikely way to boost your credit score, but getting on the electoral register will allow lenders to efficiently confirm your identity. Every month, local councils update their data with credit reference agencies, showing who lives where, and serving as a reliable identity check. Due to this, even if you never head to the polls, registering to vote can improve your credit score in a matter of weeks.

1. Close accounts you don’t use anymore

If you have a number of accounts that allow you to get credit, even if you are not actively using them, this can show lenders that you already have credit available to you. Thus, to boost your chances at being approved, it’s a good idea to officially close down any accounts that you do not use.

Overall, if you have a bad credit score, don’t panic – there are many steps that you can take to improve it over time. By following these steps in the weeks and months to come, you will be able to gradually move your credit score in the right direction, and therefore boost your chances of accessing fresh finance on terms that are favourable to you.