Credit score: Stop making credit a cruel master and turn it into a fantastic servant
When people hear “credit”, it often conjures up scary thoughts of spiraling debt and sky-high interest rates.
But credit doesn’t have to be a cruel master – it can be a fantastic servant, helping you build your financial reputation and access the big things in life, like a mortgage or car finance. You can read What mortgage can I get on my salary? to find out more about buying a home.
But, back to credit scores below…
The key is understanding how to make your credit score work for you. Here’s how it all works and what you can do today to improve credit score.
What is a credit score?
Your credit rating signals to lenders how reliable you are with borrowed money. It’s compiled by agencies like Experian, ClearScore (based on Equifax), and Credit Karma, and reflects your borrowing habits across personal loans, credit cards, and even utilities.
Lenders check your credit score to:
- Determine how reliable you are at paying back debt.
- Decide how much they’ll lend you and at what interest rate.
Steps to improve your credit score
There are some simple steps you can take to help boost your credit score:
- Get on the electoral roll: Being registered to vote is a sign of stability, and lenders like that. It’s one of the easiest ways to boost your score.
- Use a credit card wisely: Using a credit card (and paying it off in full each month) is a great way to build your credit history. Lenders want to see that you can borrow responsibly. But avoid going near your credit limit – it signals risky behaviour.
- Avoid too many hard credit searches: Applying for multiple loans or credit cards in quick succession sends red flags to lenders. Space out hard credit checks to show lenders you’re not desperate for money. Alternatively, use a credit card eligibility checker which gives you a pretty good idea of if you’ll be accepted, without it negatively impacting your credit score. We rate MoneySavingExpert.com’s Credit card eligibility calculator which checks your chances on a range of plastic for free.
- Check for errors or inaccurate information: Make sure you don’t have any incorrect CCJs, bankruptcies, or IVAs on your record. These mistakes can hurt your credit score unfairly.
Your credit score is part of your financial reputation. Whether you’re starting from scratch or trying to recover from a setback, small changes can make a big difference. Stay engaged, take control, and you’ll be well on your way to a stronger credit profile.
Ready to boost your credit score? Start by checking your credit report today and following these simple steps. Don’t forget to let us know how you get on.
Want more tips? Keep an eye out on Femme Finance as we’ll be publishing more guides in the coming weeks to help you understand credit scores.
