How to improve your credit score

Your credit score represents the information held in your credit file which contains details of your financial history, including about your credit accounts and payment activity. Each Credit Reference Agency (CRA) uses the information in your credit file to give you a credit score. This might be different with each CRA as they have their own ways of calculating a credit score.

Your credit score helps potential lenders (including loans, credit cards, utility and mobile phone companies) decide whether to lend you money or provide their services, how much to lend and on what terms. Normally, the higher your score, the more likely you are to be given credit and on better terms. Credit files are compiled and managed by CRAs. In the UK, there are three main CRAs: Experian, Equifax, and TransUnion.

You can find free and independent information on credit scores at Money Advice Service.

There are many guides on how to check your credit score online for free, such as this one from Experian. You don’t have to worry that accessing your credit report will impact your credit score. Looking at your report is called a ‘soft search’ which only you can see on your credit file.

Your credit score can be different with each of the three credit reference agencies in the UK, as they each use their own scale to create a credit score.

Each agency will explain on their websites what they class as a ‘good’ credit score. Remember, while it’s helpful to have a good credit score, it’s also important to keep working towards general good credit health and habits, by keeping up with payments where possible and making sure your information is always accurate and up to date.

Your credit score might be low for a few reasons. For example, if you have credit agreements that are in arrears due to missed payments or have had a default or County Court Judgement (CCJ) recorded on your file, these could be impacting your score.

If the utilisation rates on your accounts is high, this will also negatively impact your score. For example, where your balance to limit is high, such as on credit cards. A high number of searches from credit applications can also be a negative indicator, as it demonstrates a consumer is trying to get a lot of credit or is potentially being declined elsewhere.

If you’re concerned about debt impacting your credit score, there could be ways to lessen the effect. For example, setting an affordable payment plan towards your debt with us will be reflected on your credit file and show lenders that you’re working towards clearing your debt. You can easily do this online, or by calling us.

Credit scores aren’t like a test, and the number they show isn’t final. You can keep working to improve your credit score, even while you’re still paying off what you owe. Keeping your information up to date can help to improve your score. Here are some of the steps you can take if you’re hoping to improve your credit score.

Register to vote

If your name isn’t on the electoral register, you might find it harder to get credit. You can register to vote easily online at Gov.uk.

Stability Indicators

The length of time that you've been at your address, with your current employer or with your current account provider will influence you credit score. Switching current account providers sometimes comes with incentives, but doing this can sometimes negatively affect your credit score.

Correct mistakes in your credit file

When you look at your credit file, check that the address given for you is correct. Even small errors in your address or personal details can have an impact on your score so you should get them corrected.

Reduce level of debt

If you have outstanding debt, paying this off before applying for more credit could help improve your credit score. If you have debt with Lowell, we’re here to listen and help manage your debt with a personalised payment plan, so you can start working to become debt-free with Lowell. Requesting limit increases on your credit cards can also positively impact your credit score as long as you continue to try to reduce the balance.

Avoid missing payments

If possible, try to keep up with payments on time, as missed payments and defaults registered on your credit file can have a negative impact on your credit score. Ensure you have direct debits set up to pay at least minimum payments. Also, try and avoid being overdrawn each month.

We know it can be difficult, especially if you’re going through tough personal circumstances. So if your account has been defaulted or is in arrears because no payments are being made, by speaking to Lowell and putting a plan in place, your credit file should be regularly updated to show that you’re making payments toward your debt. Once the debt is paid in full, the default will be marked as satisfied.

There isn’t a set credit score that you need to get a mortgage. When you apply for a mortgage, a lender will go to the CRAs to request a report and credit score, to help them work out if you’re likely to pay back the mortgage.

However, each lender might have their own way of deciding whether you’re eligible for a mortgage. Their decision is likely to include looking at your credit score, but it’s not the only thing they’ll look at. They might also consider information you’ve given on your application, or information they already have about you, for example, if you’ve been banking with them. You can find independent guides online at sites like Money Advice Service on how to improve your chances of getting mortgage if you have existing debt.

If you have a debt with Lowell that’s in arrears due to lack of payment or has defaulted, it could be impacting your credit score. However, if you’re making payments and working with Lowell towards clearing your debt, we’ll regularly update the outstanding balance on your credit file to reflect this, which mortgage lenders will see when they review your application. Once your debt is paid in full, it will be marked as satisfied.

Your credit score isn’t final, and it can change. You have the power to continue to work and improve it. If you’re concerned about a Lowell debt impacting your credit score, you can get in touch with our friendly team and start taking back control of your finances by working with us on a payment plan. For more helpful guides and tips, head to the Lowell blog.