Finance

How to Improve Credit Score Fast in The UK?

Your credit score is one of the most important aspects to keep your financial status healthier. Your credit score tells the lenders how responsible you are to use your credit. The better your score will be you can get approval for new loans or new lines of credit.

A greater credit score will get more opportunities to get loans with lower interest rates. If you want to improve your credit score there are various ways to follow. It may take a few months to get progress in your credit score but you can start efforting toward a better credit score within a few hours.

In this article, we are going to round up a few easier steps to follow to improve your credit score faster.

What is a good credit score in the UK?

There is no fixed rule followed by the lenders in deciding whether they will provide you with the loan or not. There is no such universal credit score for the lenders to decide if they will accept you as their customer or not.

In the UK, there are main three credit reference agencies (CRA), that implemented a score or scale for what it considers an “excellent” or “good” credit score.

  • Experian 881 to 960 is considered as good; 961 to 999 is excellent
  • TransUnion 604 to 622 is considered as good; 628 to 710 is excellent
  • Equifax 531 to 670 is considered as good; 811 to 1000 is excellent

If you own a “good” or “excellent” credit score, you can get more opportunities to get a loan from lenders. But it is not a guarantee that all the lenders will treat you the same way. Each lender follows his own rule to decide whether he will consider you as their customer by giving the loan.

If you own a “bad” or “low” credit score there are more chances to be turned down when you apply for a loan. Or they can offer you a less favorable interest rate. So, you need to develop your credit score first.

Why should I improve my credit score?

When you will apply for a loan then the lenders will calculate your credit score. Then they will decide whether they will provide you with the loan or not depending upon your credit score. It’s generally based on:

  • Your application details
  • Information from your credit report
  • If you have been a customer of theirs, they will verify the data that they already have.

Each lender follows their principle in deciding whether they will provide you with the loan or not. They gather information from the data they have access to.

Why is my credit score going down?

Your credit score can drop due to a variety of reasons such as missed or late payments, and changes to your credit application rates. Also includes closing the older accounts, which may shorten your credit history overall.

If there are any changes happen in your credit mix and you have applied for new credit accounts, these are also the reasons for your credit score going down. Besides, you must keep in mind that credit report faculties due to identity theft or mistake can also cause a decline.

How to improve credit score:

Check out our easy and faster tips to improve your credit score:

You need to check your credit report and correct mistakes:

You need to check your credit report at least once a month to be assured that the information it contains is correct and up to date. It is a good idea to check the credit report frequently as there is a rise in identity theft and fraud.

If you notice any mistakes you need to rectify them as soon as possible. Further, you need to make sure that these mistakes will have no further future impact on your credit score.

Register to vote:

If you have no role in the election then it may be difficult for you to get credit. The lenders use your electoral roll as the confirmation that the address you have provided in your loan application is correct.

CRA in the UK registering to vote can boost your chances to get credit from lenders. Because registering to vote can improve your credit score by 50 points.

Make regular payments on time:

Paying your due payments on time and in full each month will enhance your liability to the lenders. Lenders will notice that you are a liable and capable person to handle your credit in a good manner.

Besides, well-managed accounts will improve your credit score.

Have your credit utilization low:

Your credit utilization is the percentage of your credit limits that you have used. Suppose your credit limit is £3000 and you have used £1500 that is mean that your credit utilization is 50%.

Generally, lenders find positivity in a lower percentage, and your credit score also is increased. Try to maintain your credit utilization below 30%.

Avoid multiple applications:

If you have been turned down by credit, it will not worthier to apply for another credit card or loan instantly. If you have applied several times, the lenders will take you as a financial difficulty.

CRA in the UK suggests not opening another credit account for the following six months will boost your credit score by 50 points.

Also read: Everything About PPI Claims: Plus 5 Best Companies In The UK

FAQ:

How long does improving my credit score take?

Ans: There is no fixed set of time that your credit score will take to be improved. The time required for improving your credit score depends upon various factors. If your credit score is low due to poor payment history or multiple collections, then it may take several months of on-time payments to make any improvement in your credit score.

What should I do if I am rejected for credit?

Ans: Any refusal of credit occurs based on the information gathered by the CRA in the United Kingdom. If you are refused credit, you cannot have the right to ask why the lenders. If you feel you have been turned down for the credit unfairly you can further appeal and provide the information to the concerned agency.

Does paying off a loan help or affect credit?

Ans: Paying off a loan can harm your credit history and credit mix. If your paid-off loan is your oldest credit line, then your score will drop. If the paid-off loan is your only loan, then your credit mix hurts.

Conclusion:

If you have turned down a loan or you think of making healthier your credit score then you can follow the above-mentioned ways to improve your credit score. It is important to understand how the credit score is worthy in your financial prospects.

Improving your credit score is a good objective, it can take several months, or several years to observe a noticeable impact on your credit score when you start taking steps to turn it upward.

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