12-week plan to a better credit score

“How do I improve my credit score?” is the question on everybody’s lips. It’s easier than you think, and we can show you how.

It can take time to build up your credit score, but there are things you can do today to start improving it. We’ve created a comprehensive 3-month step-by-step to give your score a boost.

You’ll want to try and make as many updates as possible, as it can take up to three months to see an improvement. If you can do these steps in a shorter space of time you will potentially see the benefits to your credit score quicker. 

Week 1: Register on the electoral roll

Confirming your proof of your address will improve your score, and you can do this by registering on the electoral roll. This means you appear more trustworthy to credit reference agencies. It can also boost your credit score, and it’s super easy to do.

The process is also called ‘registering to vote’ and can be done by contacting your local government. You can do it online or by post. To register you need to be aged 16 years old or over and a UK citizen (or an Irish, EU or Commonwealth citizen with a permanent UK address). You’ll also need your national insurance number.

Note - if you’re not eligible to register on the electoral roll, you can still submit proof of residency directly to the main credit reference agencies. You’ll need a UK driving licence or utility bills. Contact each credit reference agency individually to find out how to do this.

Week 2: Register on the Rental Exchange initiative 

If you’re a tenant and maintain your rent payments, think about signing up for the Rental Exchange initiative. This will make sure rental payments are included on your credit report, so you can build up your credit history in the same way homeowners do.

You’ll need to pay on time, in full every month. Not doing so could result in harm to your credit score. You can sign up at Credit Ladder or Canopy.

Week 3: Spend this week understanding your score

Check your credit score for free with the top three credit reference agencies in the UK: Equifax, TransUnion and Experian. You can look at your credit file as many times as you like without affecting your credit score, as it only counts as a ‘soft search’.

Find out how high up your score comes on the scoring models used by the top credit reference agencies. Bear in mind that seeing different scores with different credit reference agencies is normal, as they all use unique scoring models.

Look into how points are awarded by Experian - even though each credit reference agency has their own scoring model, the things that affect your credit score positively and negatively will be the same, so this is a good way to find more positive changes you can make.

There are apps available that enable you to check your score and offer information to help you improve it. These include CredAbility, which can show you your Equifax credit score Credit Monitor and the Experian app, and Intuit Credit Karma, which shows your TransUnion credit score. Make sure you check before you sign up, as some apps charge subscription fees.

Week 4: Check your report for errors

Make sure any errors on your credit file are rectified as soon as possible. Mis-matched details could be having an unnecessarily negative impact on your score.

If you spot something wrong on your credit report, get in touch with the credit reference agency directly to fix it. Here’s what to look out for:

• The wrong address or name, including your middle name
• A duplicate account
• Accounts and credit searches you don’t recognise (which could indicate fraud)
• Closed accounts that are still marked as open in error
• Payments marked as missed or defaulted, when they were paid on time (missed payments can negatively affect your credit score)

Week 5: Add your name to household bills

If you live with other people, either as a renter or a joint homeowner, think about adding your name on some, if not all of your bills. As long as the bills are consistently paid on time, you will prove to the credit reference agencies that you can handle your finances well.

Be aware that adding your name to household bills could create a financial association between you and the other account holder. If they have a bad credit history, then while this won't affect your credit score, it could still affect your eligibility to get credit in the future. It’s best to think about this and have a conversation with the other account holder about their financial history before you go ahead.

Week 6: Consider any existing finances you could utilise

You can also improve your credit rating by paying for insurance or a mobile phone contract monthly. This may, however, be more expensive than paying annually, so you will need to weigh up the cost vs the benefits.

Week 7: Disassociate yourself from old financial ties

Do you have financial associates or connections listed on your credit report? If you’re no longer connected to this person financially (which means the accounts you used to share have now been closed), you can ask the credit reference agencies to issue a ‘notice of disassociation’. This will remove any connection with this person from your credit file. This may not change your credit score, but it could still improve your chances of being approved for credit.

Week 8: Consider a credit builder card

If you don’t have much of a credit history, your score is likely to be lower than you’d like and you may be refused credit.

Lenders use your past financial behaviour to predict whether or not they’ll get their money back. With little payment history on your credit file, you could seem risky to lenders, and they may reject your credit application.

To build up your credit history, look into getting a credit builder card. Bear in mind that this type of credit card does come with higher interest rates and lower credit limits than other credit cards. However, if you pay off the balance in full every month, then you should minimise the amount you're charged in interest.

Paying off the balance in full every month will also show lenders that you can borrow responsibly. This could help boost your credit score.

Alternatively, you could apply for an interest-free overdraft from your bank. Make sure you pay it off in full before any interest or fees are added. If you use any of these options to borrow a small amount of money that you pay off quickly, you can avoid charges and improve your credit history.

Remember, only apply for credit if it’s affordable for you. If you want to see if you’re eligible for credit before you apply, use an eligibility checker to perform a soft search. It will indicate whether you’re likely to be accepted or not, without affecting your credit score.

Although building a strong credit history may mean taking out new credit agreements, don’t make the mistake of making too many credit applications. This can make it look like you’re struggling financially. In fact, not applying for credit for a period of six months can actually improve your credit score in some circumstances.

Week 9: Set up a direct debit for your bills

Missing payments is one of the most common ways to decrease your credit score. Just one missed payment could have a drastic impact on your score, so it's best to make all your payments on time if you can.

Setting up Direct Debits or Standing Orders for your bills can help with this. Or you can set yourself reminders on your phone (e.g. via apps or your calendar) to keep on top of your repayments. Can you afford to pay your balance in full? If you’ve set up a new card to build your credit, paying the amount in full will reduce any interest charges. Try to limit the amount you spend on your card each month to make sure you can afford to do this.

Week 10: Consider reducing your debt with savings

This week, focus on reducing your debt, especially if you’re over or very close to any of your credit limits, as this will be having a negative impact on your credit score.

If you have any savings, you may want to think about using these to pay off your debt. Generally, the interest you’re paying on your debt will be greater than any interest you’ll be receiving on your savings, so you'll save money in the long run by doing this. Reducing your debt can also make your monthly repayments lower, which may make it easier to ensure you pay on time, in full each month.

Reducing debt will help to improve your credit utilisation ratio – if you keep your credit utilisation at around 30% or below, then it can increase your credit score. Read more on this later on.

Week 11: Generate extra income to go towards your credit repayments

If you don’t have savings, you could consider looking to generate extra income to put towards your debt, or give you a bit more disposable income to enjoy. 

You can sell second-hand items on websites like eBay, Gumtree, PreLoved and Facebook Marketplace. There are also ways in which you can make money from your home, as well as starting a side hustle for extra cash.

There are other ways to make money, too. If friends or family owe you money, then see if they're able to pay you back. Or, check if your energy bill has gone into credit and claim back the excess. You can also take a look at your spending and cancel things like unused subscriptions to free up money to go towards your debts.

The more you can pay towards any existing debt, the stronger your credit rating could be.

Week 12: Consider making extra payments

Making payments towards your debt twice per month, or more often, could potentially help to improve your credit score in the long term. It doesn’t have to be twice the amount you normally pay, and you may find it easier to manage paying two smaller amounts on a fortnightly basis. This could be easier if you get paid weekly or fortnightly.

As long as these payments total at least the minimum amount due, your account won’t default and no late fees should be charged. If you pay more than the minimum amount it will reduce the amount of interest you will pay overall, as you will pay your debts off quicker (and reduce that all important credit utilisation). If you are charged interest on a daily basis for that account, it will also cost less interest than one larger payment at the end of the month.

For more strategies on clearing your debts, check out our guide on ‘how to consolidate debt’.

What next?

Always making your contractual payments on time, and paying more if you're able to reduce the amount you borrow will, on top of the financial housekeeping we’ve explained above, help push your credit score in the right direction.

Building up and improving your credit score takes time and patience. If your debts have defaulted, for example, they will remain on your credit file and negatively affect your credit score for six years. But, by following our tips, you can start to build a positive history that will show that you're better at managing your finances now than you were when you defaulted. It's also worth bearing in mind that each lender uses their own criteria when assessing credit applications, so what a credit reference agency says is negatively affecting your credit score may not stop you from getting credit altogether if you need it. As we suggested before, using an eligibility checker can give you a good idea of whether a lender will accept you or not, without needing to submit an application and without affecting your credit score.

Another factor to think about is managing your credit utilisation ratio month to month. This is amount of your available credit that you’re actually using. For example, if you have a credit card limit of £2,000 and your balance is £500, you have a credit utilisation of 25%.

Generally speaking, if you keep your credit card balance at or below 30% of your limit, then your credit score could improve. This is because you're showing you can use credit responsibly and you aren't dependent on it. By contrast, borrowing more than 90% of your credit limit can cause your credit score to decrease, as lenders may think this is a sign that you're reliant on credit to make ends meet. If you have more than £15,000 of debt on a credit card, or split between multiple credit cards, this can also negatively affect your credit score, for the same reason.

Finally, be mindful of how long this activity will take to have an impact. Experian advise it can take up to three months to update your credit file with new information. So, you may not see improvements immediately, but they should start to appear around the three months mark after you make any of the above changes.