Among several financial pearls of wisdom, including “save for a rainy day” and don’t spend more than you can afford, “keep a high credit score” is also invaluable advice. A good credit score can unlock a multitude of benefits and savings, as well as access to credit cards and loans if needed.
Your credit score reflects how reliable you are with repaying money and this score is calculated based on the history of your finances and how they’ve 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 Express.co.uk: “Credit scores are factored into a lender’s decision on whether you’re accepted and, importantly, what rates are then offered.
Credit reporting company Experian recently carried out research that found 47 percent of consumers to believe they will secure the best rates for loans, but in reality, the top rates are typically only granted to 51 percent of successful applicants.
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Mr Jones continued: “Interest rates are usually personalised to an individual and their circumstances, including in their credit score.
“Equally, at a time in which people are grappling with higher prices as a result of the increased cost of living, engaging with your credit score could be a key step in understanding your personal finances and ensuring you are planning for the future.”
In view of this, Mr Jones provided six key ways you can improve your own credit score to better position yourself financially.
1. Know your score
Firstly, it’s advised you should check your current credit score.
Mr Jones said: “This can be done in minutes by signing up with them directly, such as the free score service on Experian’s website, or through third parties like ClearScore and Credit Karma. All services will include helpful tips and guidance.”
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 checking services.
“That way, you will only apply for deals you are likely to get and will avoid collecting multiple ‘hard’ search footprints, protecting your score.”
Money Saving Expert offers a great “soft” search tool that allows you to check what credit cards you could be eligible for without impacting your score
4. Consider allowing your credit history to mature
Mr Jones said: “While it is sensible to shop around from time to time to make sure you are getting the best deals, it will help your credit score if you let some of your credit accounts mature.”
For example, if you hold the same credit card for five years, this can add 20 points to an Experian Credit Score.
Mr Jones said: “Experian Boost looks at a number of things including regular payments to council tax, savings, and digital streaming services such as Netflix and Spotify.”
If this analysis provides a strong payment history, Experian will apply a calculated boost to your score, immediately.
Mr Jones continued: “Boost will never cause your score to drop and around two-thirds of customers see an instant improvement.”
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