5 ideas to improve your credit score

In these days of economic uncertainty it pays to have a healthy credit file.

Loans and mortgages that come with cheap rates are becoming more difficult to get hold of, so it's important that you look after your credit score now, rather than tomorrow.

Here's a few ideas from our Credit Ladder experts.

1 Beware of your credit utilisation levels

Say what? Finance experts love to make things more complicated than they need to be, and credit utilisation simply means; how much of your credit limit you have used.

Ideally, keep your credit card balance at around 30% of your limit, although for the best credit scores, a 10% utilisation should be your goal.

2 Ask for more credit

This may sound crazy, but bear with us. If you can't afford to get your credit card utilisation (see above) down to 30% then one short-term strategy is to ask for more credit. That way, your oustanding debt will lower as a percentage of the overall debt.

There are a couple of things to bear in mind. The first is that your application to increase the limit may be recorded on your credit file which could actually reduce your credit score in the short term - if you've already applied for a loan recently.

Also, just because your limit is higher it isn't a green light to spend more!

3 Pay your bills on time

We all MEAN to pay our bills on time. But many people simply forget, and any missed payments will harm your credit score. So instead set up direct debits for all of your regular bill payments.

4 Get a secured credit card

If you don't have a credit history then a 'secured card' is a way to quickly rebuild your credit score. As its name suggests a secured card, and there are several available, is not a credit card as such though it is used in exactly the same manner.

The difference is that a secured card doesn't provide credit in the traditional way but is funded by a cash deposit. Your credit limit matches your deposit which is a safeguard against you not making your repayments.

5 Keep your accounts open

If you have cards you no longer need or use it may be worthwhile keeping the account open. The older an account the more positive affect it will have on your credit score - but watch out for any annual fees that you may be charged.

6. Pay your rent via Credit Ladder

If you are a renter in the private sector you can improve your credit score by registering our service. Click here for more details on how you can increase your credit rating simply by making your normal monthly rent payments.

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.