How To Improve Your Credit Score

Before deciding whether or not to lend you money or extend credit, financial institutions will base their risk evaluations on your credit score, so it’s important to try to maintain a good credit score or, if yours is currently not looking so great, learn how to improve it.

your credit score rates

It’s amazing how much of a difference a three-digit number can make, but your credit score will determine whether or not you can take out a loan or qualify for a mortgage, as well as how much interest you’ll pay on any loans you’re accepted for.

This credit score improvement guide will assist you by explaining how your credit score is calculated and the most common ways to raise your score, as well as the things that lower it, so that you can lend responsibly and qualify for lower interest rates on any money you borrow.

This credit score improvement guide will assist you by explaining how your credit score is calculated and the most common ways to raise your score

What Exactly Is A Credit Score?

A credit score is simply a number between 300 and 850 when written down, but it has a deeper meaning that influences how financial institutions perceive you.

The higher your credit score, the more appealing you are to lenders.

A credit score of less than 640, for example, indicates that lenders consider you less reliable and will be less likely to lend you money or will charge you higher interest rates if they do. This is to compensate for the increased risk based on your credit score and history.

A low credit score may also mean that you are only offered a shorter repayment period or that a co-signer is required before you can be approved for a loan.

Although different institutions will have their own standards for measuring credit scores, here is a general breakdown of the various credit brackets:

  • Excellent: 800-580
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300–579

Don’t worry if your credit score is currently in the lower brackets; we’ll provide you with tips on how to climb the ranks to a perfect score throughout this article.

How Is Your Credit Score Determined?

The Fico score is the most commonly used type of credit score, and it was named after the company that invented it, Fair Isaac Corporation. Equifax, Experian, and TransUnion are the three major credit bureaus that collect the information used to calculate your credit score.

The Fico score is the most commonly used type of credit score

These bureaus estimate your risk level by looking at how many open accounts you have in your name, your total debt, repayment history, and a variety of other factors.

They evaluate the following five major factors:

  • History of payments
  • Total sum owed
  • Credit history length
  • Credit Categories
  • New credit

To break it down, your payment history accounts for 35% of your credit score. The total amount owed and what percentage of your total available credit you’re using, known as credit utilisation, account for 30% of the total.

how is your credit score determined

Credit history length accounts for 15% of your credit score, with shorter histories considered higher risk due to less data to analyse. New credit accounts account for the remaining 10%, which includes the number of new accounts you apply for that result in credit inquiries.

How Can You Raise Your Credit Score?

A good credit score is required if you want to take out a loan or be approved for a mortgage. Even though some online catalogues are available with bad credit, having a good credit history is advantageous. However, even if yours hasn’t been great over the last few years, doing the following things can help improve your credit score.

how to raise your credit score

Your Credit History

When attempting to improve your credit score, your credit history can serve as a useful reference point for you to see what has previously improved or lowered your credit score.

You can review your credit history by requesting a copy of your credit report from all three major credit bureaus once a year for free via the official website.

There is always room for error, so when reviewing your credit history and reports, look for discrepancies and ensure there is no incorrect information that could be lowering your score. If you find any errors, you must report them as incorrect.

Avoid Making Late Payments

Making on-time debt payments is one of the most obvious ways to improve your credit score. Although this can be difficult if you are in financial difficulty, not only will this have a negative impact on your credit score, but late payments can also result in costly penalty fees.

Even “doing this once or twice could cause problems that can cost you for years,” according to Martin Lewis of, but “defaults in the previous 12 months [will] help you the most” when applying for a new loan.

As corny as it sounds, if you’re having financial difficulties, it’s worth contacting your lender. In the best-case scenario, you may be able to change your repayment schedule, which is preferable to completely missing payments, though this will still have an impact on your credit score.

On Time Payments

Set up a recurring direct debit payment with your bank to ensure you never miss a payment. You can set this to be the minimum monthly amount required by your lender’s agreement, but we recommend paying off more if possible.

The quicker you repay the total amount owed, the less interest you will pay.

Aim for a credit utilisation of 30% or less.

The amount you owe in relation to how much credit you have available to you, i.e. your credit limit, contributes to your FICO score. This is known as credit utilisation, and it is best to keep it under 30%. Borrowing up to £300 of a £1,000 credit limit, for example.

A percentage greater than 30% indicates to potential lenders that you are relying more heavily on your credit and may have difficulty repaying your debts.

Credit utilisation refers to the total amount borrowed across all of your credit cards and statements.

If you had one credit card with a £2,500 credit limit and a current balance of £1,000, and another with a £3,000 credit limit and a current balance of £2,000, your credit utilisation would be 55%.

To calculate your credit utilisation, divide the total debt amount (in this case, £3,000) by your total credit limit (£5,500) x 100. (55 percent ).

Try To Avoid New Credit Requests

You’ve probably heard the terms “hard” and “soft” inquiries in relation to credit history checks, which are the two kinds of inquiries that can be made about your credit history.

Checking your own credit, for example, falls under the category of “soft” inquiries, as do checks conducted by potential employers, financial institutions with which you already do business, and credit card companies before sending you pre-approved credit offers.

No matter how many soft inquiries you have, they have no effect on your credit score.

Hard inquiries, on the other hand, can have long-term consequences for your credit score. This includes mortgage application checks and new credit card or other forms of new credit, which should be kept to a minimum.

This is because, according to, “multiple hard inquiries within a short period of time can be predictive of credit risk, so having too many inquiries for different types of credit can result in a lower credit score.”

Avoid A Thin Credit File

A thin credit file is a term used to describe a short credit history, which means your credit score is based on less data and information on your credit report. This can be a disadvantage when applying for credit because lenders will not have proof of your dependability.

A thin credit file is a term used to describe a short credit history

Fortunately, there are some types of credit that can help you improve your credit score.

Applying for a second secured credit card, which is designed to help users establish a better credit history, can help you fatten up a thin credit file. It functions similarly to a credit card, but you must first pay a refundable security deposit before you can open an account.

A credit builder loan, which is similarly designed to help individuals improve their credit score and financial stability, is another option. These loans are typically made available by smaller community financial institutions and credit unions, with the funds held in a savings account by the lender until the loan is paid off, at which point the funds are released.

Do Not Close Old Credit Accounts

While we don’t blame you for believing that paying off your student debt sooner rather than later will improve your credit score, it may be better to spread out the payments over time to keep the account open, as the account’s age will boost your score.

The same is true for the majority of your old and unused credit card accounts, which can help your credit score by contributing to your average credit history. This is because prospective lenders prefer to see evidence of your responsible lending.

Long-standing accounts are rewarded by the systems that determine credit scores, so even if you haven’t used them in a while, it’s worth keeping them open.

Furthermore, closing old lines of credit reduces the amount of overall credit available to you and lowers your total credit limit, which means your balance-to-limit ratio and thus your utilisation rate will rise, potentially exceeding the recommended 30 percent limit.

A New Loan To Pay Outstanding Debts

Debts can creep up on us, and what was once a minor portion of your total credit limit is now a significant amount of money owed and working against your credit score.

Paying off high-interest credit card debt with a personal loan, which often has lower interest rates, can be beneficial in some cases, but you’ll need to check the terms and rates per your loan agreement to ensure that you’ll be able to repay it on time to protect your credit score.

Applying for a debt consolidation loan may be worthwhile, as being bound by interest rates that are even slightly lower than your credit card debt can have a significant impact on the total amount required to be repaid by the end of your agreement, potentially thousands of pounds.

The basic idea behind both of these loans is to consolidate all of your debts from all of your credit cards into a single monthly payment, rather than having to manage multiple individual payments, which puts you at risk of forgetting or missing a payment.

A longer payment term will increase the total amount of interest you must pay, but if it allows you to make smaller, more manageable monthly payments, you will be more likely to pay them on time, protecting your credit score from missed payments.

Open New Accounts And Paying Them On Time

While it is true that you should only open new credit accounts when absolutely necessary, opening new accounts responsibly and paying them off on time can help you improve your credit score.

As previously stated, having older accounts can help build your credit history, but what if you don’t have any older accounts to keep open? Remember when we talked about the disadvantages of having a thin credit file?

Lenders will view someone who has never taken out any form of credit, such as someone who has never applied for and been approved for a credit card, as a higher risk than someone who has a proven track record of managing their credit responsibly.

The only way to build credit and demonstrate your dependability to lenders is to apply for credit (prudently!) and stay on top of your payments so that you pay them on time.

financial stress due to low credit score

Long-Term Credit Score Improvement

Unfortunately, despite the frightening speed with which it can fall after even a single missed payment, there is no quick fix for improving your credit score.

When asked how long it will take to improve your credit score, the Money Advice Service stated that “credit history is built up slowly over time as you increase the number of on-time payments you make,” implying that this is a long-term commitment.

You must pay attention to your credit score, checking in with your reports and keeping an eye on it so that you can track how you improve it over time.

It’s also worth noting that the majority of the negative strikes against you as a borrower will be removed from your file after six years. Missed payments, defaults on any agreements, bankruptcy, and County Court Judgments are examples of this (CCJs).

Paying Your Credit Cards On Time

A couple who manages their credit cards in order to improve their credit score.

When trying to improve your credit score, it’s critical that you can demonstrate to potential lenders that you’re responsible with your credit and can manage your credit cards.

Here are a few of our best tips for responsibly managing your credit cards.

  • Set up payment reminders or automatic direct debit payments to avoid missing any monthly payment deadlines.
  • Check your bill on a regular basis to avoid surprises.
  • Keep your total debt to a minimum and stay within your credit limit.
  • Avoid transferring debt from one credit account to another and instead work toward paying it off.
  • Only apply for new credit cards when absolutely necessary.
  • Avoid using a credit card to withdraw cash.

If you’re having trouble managing your debt and would like some advice on how to get back on track, there are a number of credit repair companies in the UK that will explain your credit report and offer you free advice.

Monitor Your Progress

Tracking the progress of your credit score will allow you to see which key factors have a positive or negative impact on your score, as well as how to improve it overall.

For example, the Money Saving Expert Credit Club allows you to access your credit score and provides you with much more information about your borrowing habits, which can help you improve your credit score and be accepted for future loans.

You will not only be able to get a better idea of how lenders will perceive you and your credit applications, but you will also be able to use their unique affordability score, which calculates how much you can afford to borrow based on your income and estimated spending habits.

Although there are other similar services available, one of the best things about the Money Saving Expert Credit Club is that it also provides an eligibility tool that will pull up the best credit deals available to you and the likelihood of you being accepted.

Avoid These to Improve Your Credit Score

Now that we’ve gone over what you can and should be doing to improve your credit score, it’s time to warn you about some of the key factors that have a negative impact on how you appear to potential lenders in order to improve your overall credit score.

what to avoid to improve your credit score

Payment Delays

It’s the most obvious thing to avoid when you’ve taken out a line of credit, which is why we’ve mentioned it several times already in this article. Nonetheless, late payments are one of the most significant factors that can harm your credit score.

Although different lenders will have different standards for measuring credit history, and some will be more accommodating than others, the majority will view late payments as a sign that you’re less reliable and that you’re more likely to struggle to repay.

This can have a negative impact when applying for future credit, though there are still ways to get a mortgage with late payments and defaults.

The worst thing you can do if you are late with a payment is to bury your head in the sand and ignore it. Debt does not simply disappear! If anything, it gets worse as time passes.

Instead, contact your lender to try to resolve the situation, either by paying or renegotiating the payment to give you a few more days before they penalise you.

A Limited Credit History

Having a limited credit history to review when potential lenders decide whether or not to accept your loan application can be detrimental to your case and may sway the outcome of this decision against you.

It’s a vicious circle, but you can’t get a new line of credit unless you have a substantial credit history. So, rather than applying for every credit card you come across just to fill out your credit history, we recommend making prudent credit applications when you need them.

A good way to build credit wisely is to obtain a credit card with the intention of using it solely for a single purpose, such as paying for your weekly food shop or gasoline, and keeping it locked away the rest of the time to avoid exceeding your credit limit.

Then, each month, you can pay off your credit card debt, and because it should only be a small portion of your total available limit, you can begin to establish a solid credit history.

A good way to improve your credit history without having to apply for new credit is to take advantage of someone else’s good credit history. You will receive a card in your name if you become an authorised user on another trusted person’s account.

This allows you to make purchases on the account while the primary cardholder retains full responsibility and can change or restrict your access at any time, but the account history will also count towards your credit history report to improve your score.

Cancelling Your Credit Cards With Zero Balance

Although the majority of standard advice regarding old credit accounts is to keep them open, including the advice we gave earlier in this article, there are some cases where cancelling zero-balance credit cards may be more beneficial.

For example, if you’re already having trouble managing your credit and your credit score is already quite low, it might be a good idea to remove the temptation of additional spending and cancel older credit cards to avoid digging yourself deeper into debt.

It’s also worth noting that, while trying to improve your credit score is important, you should make financial decisions based on your current situation and needs rather than how it will affect the three-digit number assigned to represent your credit responsibility.

As a result, you will be more likely to make the right financial decisions, which will naturally lead to a higher credit score as you manage them.

Balance Transferring to a Single Card

If you’re having trouble managing and staying on top of your payments, transferring your balances to a single card makes sense. After all, consolidating all of your debts and payments into one place should make it easier for you to pay them on time.

In reality, transferring your entire current balance to a single card can harm your credit score because it increases your single-card utilisation percentage, shortens your credit history, and triggers a hard inquiry on your credit report.

That being said, a balance transfer can help to improve your credit in some cases by lowering your overall credit utilisation rate, allowing you to stay below the 30% limit. It depends on the lender you’re applying to and whether they consider your individual credit card or overall credit utilisation rate to be a risk factor.

Credit Application Co-Signing

While simply signing on the dotted line has no effect on your credit score, agreeing to co-sign a credit application for someone who then defaults on their payments can have a negative impact on your credit score, among other consequences.

If the primary account holder is late or misses a payment, you may be required to pay the amount yourself, which may lower your credit score and increase your total debt due to any debt your co-signer has, which will be included in your own credit report.

There’s also a chance that your credit score won’t improve as a result of having multiple lines of credit, which can be discouraging to potential lenders unless you have a track record of managing these finances well while keeping overall balances low and paying on time.

Inadequate Credit Diversification

Credit diversity, according to Amrita Jayakumar in an article for NerdWallet, influences your credit score in various ways depending on your previous track record and credit history.

You may have a stellar credit history with one type of credit, such as a credit card or student loan, but this does not necessarily imply that you will be a responsible borrower when it comes to taking out a mortgage loan, which can have an impact on your overall score.

It’s worth adding some variety to your credit history without applying for things you don’t need to show potential lenders that you can be trusted with all types of credit. If you’ve only ever had an auto loan, try applying for a credit-builder loan.

Not checking your credit reports

When it’s as simple as requesting your resort from the website, there’s no reason not to check your credit reports, especially since failing to do so can harm your credit score.

It’s easy to overlook things that are negatively affecting your credit score, but checking your credit reports will help you spot any negative trends or links between your spending history and changes to your credit score, allowing you to eliminate anything that is lowering it.

So, get your credit report and start reviewing it!


As you can see, there are numerous ways to improve your credit score, and there is always assistance available if you are having difficulty managing your debt.

Similarly, there are numerous things you may be doing, perhaps unknowingly, that may be lowering your score and making you appear less desirable to lenders.

We hope that by the end of this article, you have a much better idea of how to go about repairing your own credit score and putting yourself in the best position to apply for and be approved for credit in the future, if and when you need it.