Five Ways to Boost Your Credit Score

Your credit score is one of the most important factors lenders consider when deciding whether to offer you a loan. The higher your score, the better your chances of being accepted with favourable terms, whether it’s a mortgage or mobile phone contract.

The cost of living crisis has made recent times increasingly difficult financially, with almost 7.5 million Brits struggling to pay bills and loan repayments. This can lead to a drop in credit rating, so knowing how to bring it up is vital in today’s economy. These tips are some of the most effective ways to do just that.

1. Use a credit card responsibly

Making payments on time and staying within your credit card limit can demonstrate that you can manage money effectively. Be mindful of the interest rate and ensure you can pay off your balance monthly to avoid accruing unnecessary debt.

2. Don’t withdraw cash on credit cards

Fees and interest rates can be significantly higher for cash withdrawals than standard credit card purchases, with many lenders viewing them as a sign of poor money management.
One exception to this rule is when you’re using specialist cards designed for overseas travel, which can sometimes offer favourable rates for foreign currency withdrawals. Otherwise, it’s best to steer clear of this option.

3. Pay your bills on time

Alongside your credit card repayments, you should also pay your other bills on time. Failure to do this can negatively affect your score and signal that you’re not managing your finances properly.

Setting up direct debits can be an effective method. Always ensure you have enough money in your account to avoid going into your overdraft and incurring fees.

4. Register to vote

If you’re not already on the electoral roll, registering to vote is one of the quickest and easiest ways to boost your rating. Many lenders use it to verify your identity, and not being on it can make it more difficult to get approved.

5. Avoid closing old accounts

Closing an old account might seem like a good idea, especially if you’re not using it anymore. However, this can actually lower your rating.

One reason is that closing an account reduces your total available credit, which can increase your utilisation ratio. This is the amount of credit you use compared to your total limit. Lenders prefer to see that you’re using only a small portion of your available credit, ideally below 30%.

Additionally, your score considers the length of your history, so keeping older accounts open can help maintain a positive record.