Easiest ways to improve your credit score

It's probably one of the most important things you seldom think about. Except when you need it.

Your credit score plays such an important role, and a far greater one than we often realise, yet few of us consciously pay attention to it. Far less try to improve it.

What is a credit score?

We all have a credit score which is compiled by the credit reference agencies. They supply our credit report and data to lenders and credit organisations.

Your credit history, loans taken, repayments made, and payments missed, along with other personal data, are all aggregated to calculate a rating.

It is this rating, or credit score, which determines where you live, which car you drive and even which phone you use.

This may sound a little outlandish but the fact is you will only qualify for a mortgage or for many other financial products if you have a good credit score. Providers will not lend if your credit score is too low.

If you are in this position, and assuming you wish to apply for credit in the future, you need to take steps to increase your score. Happily, there are some fairly easy ways in which this can be done.

Easy ways to improve your credit score

Some quick and simple steps to improve your credit rating include:

Consolidating your credit cards

If you have several credit cards with low balances your credit score would benefit from paying off most those balances and closing the accounts. Keep one, possibly two cards, which you use for all your purchases or payments

Be aware of how much credit you are using

Credit utilisation sounds complicated but basically it is a way to calculate how much of your available credit you are using.

Although no-one can really say with 100% certainty it is generally accepted using 30% or less of your maximum allowed limit will improve your credit score.

For example, if you have a credit card with a limit of £1000, maintaining a balance of £300 or less could have a positive impact on your credit score.

Make your regular payments on time

No mystery here but we all have payments we make every month. It's these, usually small, regular payments which can have a real impact on your credit score. As long as you make them on time.

Ensure regular commitments are paid on schedule every month. Setting up direct debits is the easiest way to ensure this.

Consider a credit-building credit card

If you have a low credit score or have a thin credit file, consider applying for a credit card designed to help you build credit.

These cards have low barriers of entry and a small initial limit but can quickly help to improve your credit score.

CreditLadder can help you improve your credit score

If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.

CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.

Remember the information provided in this article is for information purposes only and should not be considered as advice.