How to improve your credit score

Credit scores are one of the most important features of an individual’s financial health. Not everyone knows what it is, where they can find it and how they can improve it which can create problems when you least expect it.

Your credit score is used by all kinds of lenders to judge how safe you are to lend to. This could be used when someone applies for a mortgage, a loan, a credit card – or even a mobile phone contract.

To help, we’ve created a guide to understanding credit scores and more importantly, how you can improve yours to ensure you have access to finance whenever you need it in the future.

How do you check your credit score?

There are several ways that you can check your credit scoreand report and they are quite straightforward. The first is to use a free credit report from pages like Experian.

Your score is calculated using a range of metrics which includes your credit report, application form and if you’re an existing customer, the knowledge they have for you.

Once they deliver your credit score report, they’ll be able to tell you if it’s good or bad and what you would be able to borrow with it.

If you have bad credit and you find yourself needing credit in an emergency, there are options. Repaying your loan on time could help you build your credit score. Just remember to consider what you’re committing to and be certain you can meet your repayments before you take one out.

What does having a good credit score do for you?

A higher score shows lenders that you are lower risk and more likely to meet your payments. With a good credit score, you’ll also be offered better interest rates for things like loans and mortgages.

Improving your credit score

Whether you’re someone with bad credit or you don’t have any credit history, you want to do the following to give your score a much-needed boost.

• Stay on top of your finances and ensure bills are paid on time. This shows that you pay back what you owe responsibly which lenders will like.

• If you’ve been turned down for a loan, don’t apply for another one straight away. Too many applications close together can negatively affect your score.

As you can see, a credit score can be vital to anyone’s life and so, you must do all you can to get it to a healthy number. By making the small changes above, you can do just that.