How to improve your credit score

Building your credit score could help you to access credit when you need it in future.

How do credit scores work?

There are 3 main credit reference agencies in the UK. Each collects information about you from public records, lenders and other service providers, which helps them to create a ‘credit score’.

When you apply for credit, lenders and service providers contact their preferred agencies to check your credit record, which will reveal any potential risks of offering credit to you.

More about credit scores

Why is a good credit score important?

  • The higher your credit score is, the more likely it could be that a mortgage, credit card, personal loan, overdraft or car finance application will be accepted.
  • Depending on the type of borrowing, the lowest and longest lasting interest rates might be offered to low risk applicants, who’ve shown they can manage credit responsibly over time.
  • Your credit score can also affect the amount of credit you are offered.
  • Bad credit might affect your ability to get some jobs, e.g. in legal or financial services.

Ways to improve your credit score

Below we’ve listed some of the things you could do to improve your credit score over time.

Make sure you’re on the electoral register

Being on the electoral roll is one way that your identity and home address can be confirmed, which may help to improve your credit score..

Don’t move home too regularly

Your address links your identity and financial activity, helping to prevent fraud. In addition, having the same address for a long period suggests your circumstances are reasonably secure.

A woman carrying shopping bags

Spend sensibly

It could suggest you’re reliant on credit if you carry a lot of debt and are often close to your credit limits.

A young person with a coin jar

Use a bank account

Making regular payments by Direct Debit could also help to improve your credit score. Just make sure there’s money in your account to cover payments, or your credit score could be damaged, rather than improved. Using and managing an arranged overdraft carefully could also help to improve your credit score over time.

Maintain accounts

The average age of your active credit accounts could also affect your credit score. Having the same accounts for a long time suggests you can manage them responsibly.

Manage accounts carefully

Lenders and service providers will report arrears, missed, late or defaulted payments, and if you go over your agreed credit limits.

All accounts could count

In addition to mortgage, credit card, loan, car or overdraft payments, it’s important to maintain store card, mobile phone contract, TV subscription and other household bill payments.

Check details held about you

Especially if you’re planning an application, it’s worth checking the details held by each credit reference agency. If any of their information is incorrect, you could submit a data dispute to the relevant agency, so they can investigate and update their records accordingly.

Pay off existing debit balances

Lenders are naturally more likely to offer credit to people who have less existing debt, so try to minimise debit balances.

Before you apply

Whether or not you’re accepted, ‘hard’ credit searches may affect your credit score, especially if you make a number of full applications in a short period. Some lenders offer 'soft' credit checks or quotations on selected products, which could help you to understand your eligibility, without impacting your credit score.

Use a range of credit options

Having a mix of credit accounts shows you can manage different types of borrowing, from secured lending, such as a mortgage, to unsecured credit cards and loans. Even if you have a good income, if you don’t use any form of credit, your credit score may be low.

Two people looking out

If you have joint accounts

Things like bank accounts, mortgages and even utility bills may create a financial link between you and any joint account holders. This may impact your future credit eligibility if the joint account holder doesn’t have a good credit score. 

People you’re linked to financially will show on your credit record. If you’re no longer linked to someone, you could contact each credit reference agency to submit a notice of disassociation.

Address financial difficulties early

Lenders could offer support if you’re struggling to manage your financial commitments. Independent support is also available from third part organisations. Defaults, County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy will all negatively impact your credit score for up to 6 years, so they’re worth avoiding if at all possible.

How long does it take to improve your credit score?

If you’ve experienced difficulties with credit in the past, it’s useful to know that Defaults, County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy can impact your credit score for up to 6 years.

Otherwise, building your credit score may not be quick, but there are lots of things which could help to improve it over time.

More about what affects your credit score

Key points about improving your credit score

It takes time, but building your credit score could improve your future borrowing options.

  • When you apply for credit, lenders and other service providers check your credit record as part of their decision-making process.
  • You need to have a good credit score to access lower interest rates and higher credit limits.
  • You may be able to build your score in a number of ways, from making sure you’re on the electoral register and managing accounts well, to correcting errors on your record and limiting new credit applications.
  • The information held by each credit reference agency can differ, so it may be a good idea to check your credit scores and reports with TransUnion, Experian and Equifax.

Where next?

Know where you stand with Lloyds Bank

Sign up for ‘Your Credit Score’ to see your rating with TransUnion. It’s free to check and won’t hurt your credit score.

More about Your Credit Score