How to Improve Your Credit Score Fast

Your credit score is a three-digit number that can range from 300 to 850. Typically, a good score is over 670. It is easier to find a loan if your credit score is higher, but figuring out how to improve your credit score can be tricky.

 

How Does the Lender Get My Score?

 

Hands holding up a sign that reads "Fix Your Credit".

Lenders pull a consumer’s credit score from one of the three major credit bureaus (Transunion, Equifax, and Experian). The bureaus use the FICO scoring model to calculate the score.

 

Calculating Your Score

Factors that go into calculating your score include: 

  • your payment history and how timely you make your payments
  • how often you use your credit
  • how old your accounts are
  • your application history or how many times you’ve applied for credit
  • the percentage of credit used to unused (lower ratios are better)

 

Best Ways to Improve Your Credit Score

a map titled "map to great credit!" listing ways to improve your credit-- begin history, pay on time, different types of credit, don't borrow too much, spend responsibly, monitor credit reports, and pay off balances.

There are a few simple things you can do that may improve your credit score.

 

Pay Off Debts

Paying off your debts and paying your statements on time can help you boost your credit score. Missing payments or paying late can dramatically lower your credit score, even if it is only once or twice a year.

If you are late to make a payment, your account may be labeled as a delinquent account if you have not made a payment on your account for 30 days or more past its due date. Moreover, missing payments can lead to your account being defaulted, which means that you broke the terms of the agreement you had with the creditor, and they no longer believe you can pay back your debt, so they cancel your account.

 

Improve Your Debt-to-Income Ratio

If you have a credit limit of £5,000 and spend £2,500, your credit percentage is 50%. That is relatively high, and the lender’s scoring system might lower your credit score as a result. It is best to have a lower percentage of credit utilization.

 

Limit Your Application Volume

A tip to improve your credit score is to make sure your credit applications are timed apart. If you apply to many credit institutions in a short time, this could decrease your credit score. 

 

Watch Out for Fraud

When looking at how to improve your credit score U.K., keeping an eye out for fraudulent activity is helpful as well. It is important to monitor your statements and make sure no one uses your credit to make any large purchases. If you are frauded, it is important to make it known to your bank and any lenders out there so they can adjust any damage that was done to your credit and open an investigation.

 

Borrow Within Your Means

Borrowing more money than what you can afford can also take a toll on your credit. If you fail to pay back your debts, it could lead to bankruptcy, CCJ, or IVA. 

A CCJ is a county court judgment for debt. You would get a CCJ if someone decides to take you to court because you owe them money and you have not responded to the charges against you.

An IVA is an individual voluntary agreement. These are agreements in which the debtor and creditor set terms for how the debtor will pay back the creditor. For example, the debtor could write in their contract that they will take a portion of their salary every month to give to the creditor until the full amount is paid off in two years. As a result, the creditor might also agree to take off some of the debt if they receive all the money before two years. This agreement is just an example of what could pan out during an IVA, and it depends entirely on what the debtor and creditor negotiate. 

It is important to note that bankruptcy, a CCJ, and an IVA can significantly lower your score, so it is important to steer clear of them. They could also stay on your credit record for up to six years, which could take a long time to build back up your credit.

 

Get on the Electoral Roll

While it won’t improve your score, you should absolutely make sure that you are on the electoral roll. 

The electoral roll, or the electoral register, is a list of everyone allowed to vote in the U.K. Your credit report shows if you are on the list or not, and lenders may gauge creditworthiness based on, in part, if you are on the list. You might have difficulties trying to get accepted for credit if you are not on the electoral roll. 

To register for the electoral roll, you will need to submit your information on the official government website. When you register to vote, your information is saved on your report, which helps lenders and credit agencies verify your identity. It also helps save you time since some lenders and agencies might not have to ask for forms of identification and proof of address since all that information can be found on your electoral roll details. 

 

Why is a Good Credit Score Important?

a woman holding a credit card and a phone with the text "why it matters?"

Having a high credit score looks good to lending companies because it shows that you are reliable, and it indicates that you manage your payments and pay them on time. 

A higher credit score also gives you a better opportunity to borrow more money with higher credit limits. This can be helpful for big purchases such as a new car, home, home improvements such as renovations, etc. 

It can also potentially lower your interest rates if the creditor believes you will pay them back, which could make borrowing cheaper. 

If you are curious about your credit score, you can check it with credit reference agencies. In the U.K., there are three big credit agencies, and they are TransUnion, Equifax, and Experian. You can check on what your credit score looks like at any of the bureaus. Your score may vary as each agency has its criteria for calculating a credit score.

 

How Long Does it Take to Improve Your Credit Score?

A hand pointing to a clock with a question mark above it.

Improving your credit score can take some time. It is important to start taking measures to make changes as soon as possible to fix and better your score. It is important to note that your credit score will most likely not improve overnight, and it could potentially take months or even years to improve it. 

Some information, such as a new bank account, could potentially take three months or longer to affect your credit score.

 

A Temporary Solution to Bad Credit

If you are short on cash or need to make a purchase and cannot access the funds because of your credit score, you can apply for an online payday loan or an emergency payday loan. This is particularly helpful for those that are trying to build their credit score and are still in the process of doing so. 

However, it is important only to borrow what you can pay off with your next paycheck, or you can potentially go into debt and owe even more money. The lenders will most likely check your credit score and check if you can pay them back, so it is always best to do your research first.

 

What to Do First

Hands holding up a sign that reads "take action."

We’re all looking for answers on how to improve your score fast. All in all, it is best to start taking measures as early as you can to increase your credit score. If you are beginning your journey of bettering your financial health, talking it out with loved ones and seeking help is the first step. There are many resources online that can help you, and it is always best to do some research before making any big decisions.