Representative example: borrowing £7,500 over 4 years with a representative APR of 25.4%, an annual interest rate of 25.4% (Fixed) and a deposit of £0.00, the amount payable would be £239.77 per month, with a total cost of credit of £4,008.96 and a total amount payable of £11,508.96
How To Improve Your Credit Score
Just about all of us have a credit score. If you’ve taken out a mobile phone contract, if you have a credit card or if you have any kind of loan, you’ve started to build a credit file.
It’s information that’s added to all the time, and it reflects your credit history. So whenever you apply for any form of new credit, the lender can access this information and use it to work out your suitability to their product.
You can access your credit profile too, and view the exact information that lenders look at when determining suitability. It’s well worth having a look. You may even find that some of the information is wrong – mistakes aren’t all that unusual! So you might be being refused because your credit score is actually inaccurate. Here are a few common examples of credit score mistakes:
- A debt you’ve paid off may be showing as unpaid
- A debt listed doesn’t belong to you
- Someone has stolen your identity – see the tips at the bottom of this page
If you have had any issues in repaying credit in the past, you may find that your credit score has been negatively affected, and you may have ‘bad credit’. This isn’t necessarily a problem, as we work with a number of lenders that specialise in providing bad credit car finance.
Your credit score can change, however, and if you do have bad credit there is no reason that you can’t look to improve this in the future.
What can you do
The first thing is to work through your credit profile and make sure it’s up to date and all details are correct.
- Check that you are registered on the electoral roll at your current address – the Gov.uk website shows you how
- Make sure all of your financial commitments are registered to your current address. That’s everything from mobile phone contracts to credit cards, bank accounts to personal loans
- Close down any accounts you don’t use – store cards are a good example. You are rated on all the credit you’re committed to, even if you don’t use it, so shut down anything you don’t use
- Don’t apply for credit at the same time with several different lenders. This is a common mistake, and it can raise a red flag with credit providers as they might see you as financially desperate. Remember every application you make are kept on file and become part of your score
- If you keep getting turned down, it’s best to stop applying, because each refusal can count against you. Improve you credit score before you try again, and if you need advice with managing debt try Citizens’ Advice and visit MoneySavingAdvice
- A broker may be your best bet. They’ll carry out a credit check for you, and access different lenders to find one that matches your circumstances, so you don’t get multiple applications and checks recorded on your file
How to improve your score long term
All the above tips will help make your credit score more attractive to lenders, but you can also carry on improving it.
- Think about a pre-paid credit card or one that’s designed for people with low credit scores. Rates may be higher, but if you’re careful how you use it, this kind of card can improve your score over time
- Not having a credit card can lower your score. Applying for one and using it sensibly – paying off the amount you owe each month – will help with your score
- If you’ve never had credit, a mobile phone contract is another way of improving your credit score. So long as the bill is always paid every month, maintaining a phone contract successfully shows up well on your record
- If you’ve had issues with missed payments in the past, try setting up all your repayments as direct debits, so you’re less likely to miss payments in future
- Become a reliable borrower - think carefully and realistically about how much credit you take out. Only borrow what you can really afford to repay every month, don’t let things get out of hand
Identity theft and how to protect yourself
ID theft is a huge problem. Many people don’t even realise that their identity has been stolen until they apply for credit, discovering too late that a criminal has already used their identity to get credit and never paid it back.
So check your score regularly. Keep a close eye on your accounts for transactions you don’t remember making.
Here are some tips on keeping safe:
- Be careful what personal information you share on social media – don’t give out your date of birth for instance
- Don’t use the same password on all of your accounts
- Look out for accounts you don’t remember opening
- Always check your bank account regularly to spot any unusual transactions