How to improve your credit score

In the UK, four credit reference agencies compile information on how well you manage credit and make payments – known as your credit report or credit file.  

Your credit report contains a list of all your credit accounts, such as credit cards, loans, current accounts with overdrafts etc, and how much you owe and your repayment behaviour. If you apply to a bank or other lender, they’ll usually run a credit check so they can view this history to work out how risky you are to lend to.

This check will often affect the interest rate you get, how much they’ll let you borrow or if you’ll even be accepted.  

The most recent information on your report will have the most impact because lenders will be interested in your current situation. 

There are two types of checks lenders can do when you apply for credit – hard and soft.  

• Soft credit checks don’t affect your credit score. These are usually used by lenders or comparison sites to check your eligibility before applying, to indicate what products you are likely to be approved for.

• Hard credit checks could affect your credit score. These are used when you apply for credit and will show up on your credit report. Too many in a short space of time could negatively impact your credit score and your chances of getting approved for credit because it makes lenders think you’re relying too much on borrowing money.     

Generally, a good credit history might help you: 

• borrow the amount you need – you’re likely to be offered a higher credit limit as lenders see you as a low-risk  

• qualify for more products – such loans, credit cards or mortgages 

• get lower interest rates – so borrowing is cheaper 

• get lower insurance premiums – as insurance companies might consider your credit score when deciding certain types of insurance, such as car or home, especially when you choose to pay monthly.  

• be approved for a rental property or mortgage – as landlords and mortgage lenders often review your credit report, although this might be restricted only to publicly available information like court judgments 

• get a job – as some employers check credit reports as part of their hiring process, particularly for roles that involve financial responsibility. 

A poor credit score could mean you pay higher interest rates, have lower credit limits or are refused for credit entirely. 

For example, you might see a loan advertised as 6% APR but a poor credit score could mean you’d be offered a 30% interest rate. Equally, a credit card could offer a two-year 0% interest period to those with a good credit score and just six months to lower credit scorers. 

Other lenders might offer you a different product to the one you applied for, such as applying for a current account but being offered a basic bank account without an overdraft.

Although rare, some lenders could change your existing interest rate if they think you have become more of a risk since you first applied. 

Debt Camel has more information about interest raises on credit cardsOpens in a new window  

Here’s what to check for: 

• Make sure all your details are correct and report any mistakes to the credit reference agency straight away – even a typo in your address can affect an application. 
• Make sure you’re registered to voteOpens in a new window at your current address – councils send voter data each month, so this could improve your score within eight weeks. 
• Report anything that looks like it might be fraud, such as credit that you haven’t applied for – find out more in the section below Report and fix any errors in your credit report.

If you spot mistakes, report them to the credit reference agency (CRA) to investigate. ​​The CRA will check with the organisation that provided the information to confirm if there is an error and will remove the mistake if appropriate. This process shouldn’t take longer than 28 days. While the CRA is investigating, the ‘mistake’ will be marked as ‘disputed’ and lenders shouldn’t rely on it when assessing your credit rating. 

Negative information (like missing a payment) usually stays on your credit report for six years and can’t be removed sooner if it’s accurate. However, if there were reasons why you fell behind with payments that no longer apply, you can add a note to your credit report to explain this. This is called a Notice of Correction.

 You’ll need to raise this notice with each credit reference agency:

TransUnion - Notice of CorrectionOpens in a new window

Experian - Notice of CorrectionOpens in a new window

Equifax - Notice of CorrectionOpens in a new window

Crediva - Notice of CorrectionOpens in a new window

A Notice of Correction or Dispute won’t affect your credit score but it might slow down any applications you make to borrow as lenders have to manually read your note.

When you apply for credit, the lender essentially wants to know if you’ll pay them back. A history of paying on time and as agreed therefore helps to show them you’ve been reliable in the past.    

Here are things you can do to help: 

• Open and manage a current account and stay within any agreed overdraft. 

• Pay your bills on time – setting up Direct Debits can help with this.  

• Be wary of joint accounts if the other person has a poor credit history. If you close a joint account, request a ‘notice of disassociation’ to stop your credit report from being linked. Find out more about talking to your partner about money 

• Use eligibility checkers before applying for credit. Sites such as MoneySavingExpertOpens in a new window Credit KarmaOpens in a new window ExperianOpens in a new window and ClearScoreOpens in a new window show how likely you are to be accepted.  

Here are some tips to improve your credit score:

• Make sure you’re registered to vote at your current address. Remember to do this as soon as possible if you move home. 

• If you rent, you can add your rent payments to your credit report.  Most services charge a fee, but CreditLadder and Canopy offer a free version. Find out more on the MoneySavingExpertOpens in a new window site. 

• Consider getting a credit-builder credit cardOpens in a new window ​– they’re for people with a bad credit history or who haven’t borrowed before.  

• The optional Experian Boost scheme uses ‘Open Banking’ data to include payments for council tax, subscriptions and to savings accounts when calculating your credit score.  

You might see adverts from firms that claim to repair your credit rating. Most of them simply advise you on how to see your credit report and improve your credit rating – but you can do that yourself for free. 

Some companies might claim they can do things that legally they can’t, or even encourage you to lie to the credit reference agencies. It’s important to never use these firms. 

Here’s what to consider before applying for credit: 

• Do you need to borrow? Most borrowing comes at a cost, so it can be an expensive way to buy something, plus it’s often a large financial commitment. Waiting and saving up might be a cheaper option. Find more help in Making sure you can afford to borrow.
  

• How much can you afford to repay each month? This will determine how much you can borrow and how long you’ll take to clear the debt. To help work this out, try our free and easy-to-use Budget planner.
  

• What’s the cheapest way to borrow? There are many types of credit such as loans, credit cards and overdrafts, which are designed for different purposes. We explain the options in our free tool Your options for borrowing money.

Applying for too many products within a short amount of time can damage your credit score as you might appear desperate for credit. This can mean organisations are less likely to lend to you.  
  
Rather than applying, which uses a hard credit search, look for eligibility checkers that use a soft search to give you an idea if your application will be successful. 

Many lenders and comparison sites use these, including MoneySavingExpertOpens in a new window Credit KarmaOpens in a new window ExperianOpens in a new window and ClearScoreOpens in a new window   

If you can’t find one for the product you’re after, always double check that you at least meet minimum eligibility criteria (such as a minimum income amount). 

Once you’ve found the right product for you, you’ll need to apply. Depending on what the lender asks for, you might need to gather some information. This could include:  

• your employer’s name and address 

• your bank or building society account details 

• your monthly or annual income 

• existing credit commitments, including credit limits and amount outstanding.  

Before you submit the application, make sure everything is accurate and matches the information contained on your credit report.   
  
You should find out if you’ve been accepted immediately, though it can take a few days if the lender wants to do further checks.  

If you’re declined, don’t apply again. Instead, find out what to do if you’ve been turned down for credit.

Cifas is a national fraud prevention service. It can place ‘Protective Registration’ and ‘Victim of impersonation’ warnings on your credit file. 

Protective Registration is a paid service for people who have recently been victims of financial fraud. It shows lenders that you’re vulnerable to fraud, so they make extra checks when you apply for a financial product. While this can protect you, it can increase how long credit application approvals can take. It stays on your credit report for two years. 

A victim of impersonation warning is filed by your lender for your own protection if you’ve been the victim of identity fraud. It will usually stay on your report for around 13 months.

If you have a Cifas marker on your credit report, any time you apply for credit you might have extra checks to prove your identity. This is often done manually which means your application could be delayed. 

Having a marker under this section shouldn’t mean your application will be automatically rejected. It’s there to protect you from being a victim of fraud.

 If you think a Cifas warning has been put on your credit report in error, you can contact the lender who put it there to see if they’ll remove it. 

Be aware that credit reference agencies are unlikely to remove any entry on your report if they believe the reason the marker was put on your credit report was justified. Lenders are legally obliged to report any fraudulent attempt on your account to the credit reference agencies.