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Edwin Miles. Underwriting Manager

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How To Improve My Credit Score & Rating

I've just done an experian credit report and my credit score is zero. I've never had anything on finance before or had any credit cards. I've just applied for a credit score boosting credit card but they need extra time to make a decision. How can i boost my score to get car finance?

Posted by Andrew Maund on

Answer.

Hi Andrew, a cracking question!

There is plenty that you can do to improve your credit score. The first thing to understand is how lenders look to make a decision. All lenders have their own manual or automated scoring cards that can give out decisions based upon their criteria and what they can see at either Equifax or Experian. Sometimes lenders will look at both credit scoring agencies.

There are some lenders that will only approve those with a good, clean credit record and there are also lenders that help people who have had a fair / poor credit record. Obviously the interest rates are higher if your track record isn't so great and this is because you're seen as a higher risk. Now onto the ways in which you can improve your credit.

Firstly make sure you are on the electoral roll at your current address as lenders use this to trace your financial history. Secondly make sure all you current active financial commitments are registered in this address i.e bank account, credit cards & loans etc. You mention that you've not had credit in the past. This can be a negative as lenders have no history to base their decision on. However, my advice is firstly to get a contract mobile phone and make sure you set-up a direct debit to pay your monthly bills on time. Getting a mobile phone contract is relatively easy even for those with no credit and it's a great way to build your profile.

Next i'd advise to get a small credit card from your bank with a small limit (£500 to £1000). You don't have to go and spend it all but use it frequently for small purchases and pay it off in full each month. This is also a fantastic way to build your credit score up. Make sure you have a direct debit set-up for your monthly payments too. This way you'll never get any missed payments marked on your credit profile.

My next tip would be to make sure you don't apply at lots of different companies as the more searches you have against your name the weaker your credit score will be. Just to quash a few myths while we're on the subject - your Sky bill, council tax, rent & utility bills do not appear on your credit record so it doesn't negatively effect your credit score if you fall slightly behind with any of those payments.

So all in all you're doing the correct thing. You have applied for a small credit card and this will certainly help. If you need car finance now we may be able to get you approved on your own. If you're under 21 a guarantor would be advisable. Kind Regards, Edwin - have a great evening.

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Question.

I can see that you've said utility bills etc don't count towards credit scores but do monthly payments to car insurance companies count? Thanks, Becki

Posted by Becki Verdon on

Answer.

Hi Becki, a good question but unfortunately monthly payments to your car insurance provider doesn't help either :-)

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