Personal finance

How can I improve my credit rating? Expert advice | Personal finance | Finance

Among several pearls of financial wisdom, including “save for rainy days” and don’t spend more than you can afford, “keep your credit score high” is also invaluable advice. A good credit score can unlock a host of benefits and savings, as well as access to credit cards and loans if needed.

Your credit score reflects the reliability of your repayments and this score is calculated based on the history of your finances and how they have been managed.

The higher your credit score, the more likely you will be accepted for credit, such as mortgages, cash loans, credit cards, and at the best rates.

James Jones, Head of Consumer Affairs at Experian told “Credit scores factor into a lender’s decision on whether you are accepted and more importantly what rates are then offered.

Credit reporting company Experian recently conducted research which found that 47% of consumers thought they would get the best rates for loans, but in reality the highest rates are usually only granted at 51 % of successful candidates.

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Mr Jones continued: “Interest rates are usually personalized to an individual and their circumstances, including their credit rating.

“Similarly, at a time when people are grappling with higher prices due to the rising cost of living, reviewing your credit score could be a key step in understanding your personal finances and helping you sure to plan for the future.”

With this in mind, Jones has provided six key ways to improve your own credit score to better position yourself financially.

1. Know your score

First, it is advisable to check your current credit score.

Mr Jones said: ‘This can be done in minutes by registering directly with them, such as the free score service on the Experian website, or through third parties like ClearScore and Credit Karma. All services will include helpful tips and advice.

Next, review the information on your credit report and make sure it reflects the facts.

Mr Jones said: ‘Space out any credit applications you make and shop around using eligibility check services.

“This way you’ll only apply for offers you’re likely to get and avoid collecting multiple ‘difficult’ search fingerprints, protecting your score.”

Money Saving Expert offers an excellent “software” research tool which allows you to check which credit cards you may be entitled to without impacting your score

4. Consider letting your credit history mature

Mr Jones said: ‘While it’s a good idea to shop around from time to time to make sure you’re getting the best deals, it will help your credit score if you let some of your credit accounts mature.’

For example, if you’ve had the same credit card for five years, that can add 20 points to an Experian credit score.

Mr Jones said: “Experian Boost looks at a number of things including regular council tax payments, savings and digital streaming services such as Netflix and Spotify.”

If this analysis provides a solid payment history, Experian will immediately apply a calculated increase to your score.

Mr Jones continued: “Boost will never lower your score and about two-thirds of customers see an instant improvement.”