Everyone has a credit score, which is a representation of your financial history and credit that you have used in the past. When you apply for a loan or form of credit, the lender or finance company will use your credit score to decide whether to lend you money or not. No matter if you are applying for short term loans, switching energy companies, or taking out a new phone plan, your credit rating will need to be checked. By maintaining your credit score and making improvements where necessary, you could save yourself money on interest and time in waiting for checks.
At QuidMarket, we believe in offering as much advice as possible to help you find the best credit solution for your situation. On this page, we will discuss how to improve your credit score, why you may want to improve your credit score, and alternatives that do not rely on your credit rating. That way, you can make the positive changes needed before applying for credit or choose a different option to better suit your circumstances.
What Is A Credit Score?
Your credit score is a figure that is created from information held within your credit file. This score can differ between lenders or even different products from the same lender, dependent on the criteria that is used when assessing you as a prospective customer. While the lenders and finance companies are able to see your general credit score, they are also able to look deeper to see the last six years of information, including past credit, defaults, and completed credit cases. This is why it is a good idea to improve poor credit and maintain your credit rating as much as possible.
Despite lenders having the access to six years’ worth of information, your most recent information is generally considered as the most important. From an initial review of your current financial situation, they will be able to decide whether they want to lend to you, how much to let you borrow, and how much interest they should charge. To help reduce your chances of being turned away, there are several steps that you can take to improve your credit score in the UK, many of which can be done fairly quickly, but first, you need to check your rating.
How Do I Check My Credit Score?
Before you decide whether you need to improve your credit rating fast, you will need to understand your score. There are three main credit scoring agencies in the UK, which are Experian, Equifax, and TransUnion. Each of these agencies hold financial information on everyone, which lenders can access during a credit application. To help you improve poor credit, these agencies allow you free access to your full credit report through their partner websites, including ClearScore, Credit Karma, and MSEs Credit Club.
To check your credit score, all you will need to do is create an account with your chosen partner site and submit some basic details. You will be able to see a general overview of your rating, plus tips on how to improve your credit score, insights, and your financial history from the past six months. This will give you an indication of what a lender or finance company will see when processing your instalment loan application.
How Do I Improve Poor Credit?
If you have less than perfect credit, you will be glad to know that there are a variety of ways to improve your credit score. Many of these steps are very simple to do, but the improvements to your credit score may take time. While you may want to improve your credit fast, the truth is that the positive boost may take a few months. The ways to improve your credit score include:
- Register on the electoral roll – this may seem like a basic step, but if your name and address is not on the electoral roll, you will find it difficult to secure credit. Before applying for any form of credit or emergency loans, make sure you visit gov.uk to register.
- Check for mistakes on your file – as you can access your credit score for free, you are able to check for any mistakes. Even if you have a slightly wrong address, your credit file can be affected. Make sure you check all of your details and report any incorrect information straight away.
- Check if you are linked to another person – if you have a spouse, friend or family member’s credit rating linked to yours on a joint account, this could affect your personal rating if they have a poor credit score.
- Pay your bills on time – paying your bills on time is a great way to improve your credit score. By paying for your phone, utilities or internet bills on a set date, particularly if done through a direct debit, can prove to lenders that you can manage your finances.
- Pay off existing debt – ideally, you should pay off any outstanding debt before you apply for any new credit. If you have high levels of existing debt, banks, building societies, and finance companies might be hesitant about adding further debt that you may not be able to repay.
- Avoid moving home or changing jobs too often – lenders typically look for stability on your credit file, so you should avoid moving home or changing jobs too often. If possible, you should make sure you live at one address or work in one job for a considerable period.
- Keep your credit utilisation low – credit utilisation refers to how much of your available credit limit you use. Typically, using less of your available credit will be seen positively by lenders and increase your credit score. For example, if you have a credit limit of £1,000 and you have used £500 of it, your credit utilisation is 50%. You should try to keep your credit utilisation at 25% or lower.
- Avoid submitting too many credit applications at once – applying for too many financial products within a short space of time can be detrimental to your credit score, so you should allow time between applications for your rating to recover. Every time you apply, there will be an impact on your credit score, so multiple applications can leave huge damage.
Are There Options For Those With Poor Credit?
If you have exhausted all the ways to improve your credit score in the UK, there are a few options that do not solely rely on your file. These include:
- Bad credit loans – the checking process for bad credit loans is based on affordability, rather than simply your credit rating. This means that your monthly income, essential outgoings, and any other financial commitments will be taken into account to check if you can comfortably make repayments. While this option does not solely rely on your credit score, a credit check will be carried out, so it is a good idea to pay off any existing debts before applying.
- Using savings – if you have a considerable amount in your savings account, it may be wise to use your own cash in place of credit. That way, you can avoid paying interest and needing to improve your credit score.
- Personal borrowing – have you considered borrowing from your friends or family? If you have a trusted person within your circles who could lend you money and offer you repayment terms to suit you, this could be a good way to cover your cash needs, especially if they do not ask for interest. You could even create a formal document to make it official.
- Borrowing from a credit union – before applying to a credit union, you will need to apply to be a member. They are usually non-profit communities that are formed to help their members secure credit when they need it. Many may offer credit based on affordability, rather than reviewing your whole credit history.
However you choose to cover your financial difficulties, it is essential that you make sure you can make the required payments. If you are struggling with your finances or would like more information on how to improve your credit score before applying for credit, please seek impartial support from the Money Advice Service.
At QuidMarket, we offer a short term alternative to payday advance loans, with amounts starting from £300 and repayment terms from 3 to 6 months. Our loans are designed to help applicants cover emergency situations or temporary cash flow issues. If you need more information on our loans, please contact us and our friendly team will be on hand to help.