How to improve your credit score

Credit scores
Top tips to boost your creditworthiness

It’s crucial for everyone to prioritize the management of their credit report and score. Your credit report holds significant importance beyond simply determining your eligibility for mortgages, credit cards, or loans; it also impacts your ability to secure mobile phone contracts, monthly car insurance premiums, bank account options, and more. The current cost of living crisis underscores the heightened importance of maintaining a strong credit report. Here’s a comprehensive guide to understanding credit checks.

What is a credit rating and credit score?

A credit rating reflects the likelihood that a typical lender would extend credit to you.

When you apply for credit—whether it’s a loan, credit card, or mortgage—lenders assess your future behavior based on your past actions. Credit scoring is straightforward in principle: would you lend money to someone who has a history of not repaying?

To determine your creditworthiness, lenders analyze various factors, such as recent application frequency, outstanding debts, types of credit products held, and repayment punctuality. While some data is sourced internally, lenders often consult credit bureaus like Experian, Equifax, or TransUnion, which maintain comprehensive records on individuals.

However, the world of credit ratings is fraught with misinformation and misconceptions. Lenders may obfuscate details, while credit bureaus may promote specific interpretations to sell additional products based on consumer apprehensions.

Here’s a guide to demystify credit ratings and scores:

Credit Reference Agencies: Experian, Equifax, and TransUnion compile extensive information about your financial history, encompassing payment records with credit card issuers, loan providers, and mortgage lenders, as well as your credit application history and electoral roll registration. Lenders utilize this data to evaluate your creditworthiness.
Credit History: This encompasses your past interactions with credit, focusing on whether you’ve met repayment obligations punctually. It is not distilled into a single numerical assessment but offers a holistic view of your financial track record.
Credit Report or Credit File: This dossier aggregates your financial data maintained by each of the three major credit reference agencies.
Credit Score (as provided by a credit reference agency): This denotes an evaluation from a specific agency, though it’s important to note that it doesn’t dictate the lending decision. Lenders employ their proprietary scoring models.
Credit Score or Credit Rating (beyond agency scores): In casual conversation, this term may refer interchangeably to your credit history. However, strictly speaking, it represents how each lender synthesizes your financial track record using their unique scoring or rating methodology. The specifics of these scoring methods are typically confidential, varying across lenders.

Navigating the realm of credit ratings requires understanding these nuances and consulting reliable sources to ensure informed financial decisions.

IMPORTANT: Your credit history impacts your creditworthiness but you DON’T have a uniform credit score or credit rating

Beware of common misunderstandings – within the UK, there isn’t a singular credit rating or score universally determining your creditworthiness, nor does a blacklist of prohibited individuals exist.

Although each credit reference agency may assign you a score, it merely represents their interpretation of your financial history, often used to entice you into subscribing to their services.

However, these agencies primarily gather data shared with lenders. Ultimately, it’s the lenders who assess your creditworthiness and each lender uses their own unique and confidential scoring methods, which hold greater significance.

Here are our 10 other credit rating need-to-knows:

1. Credit scoring is about predicting future behaviour

Establishing a credit history can be daunting, especially with limited or no prior credit experience. When you apply for any financial product, it triggers a ‘credit check’. This process involves lenders feeding all available data about you into a complex algorithm to forecast your future financial behavior based on past actions.

Having either a poor credit history or insufficient credit history poses challenges. The latter scenario particularly complicates predictions, as there’s less data to assess. Think of it like lending money to someone whose background is largely unknown—you’d naturally seek more information to ensure reliability.

This underscores the difficulty faced by individuals striving to build credit records, especially if they encounter reluctance from creditors. If you belong to the category known as the UK’s five million credit ‘invisibles’, finding guidance on constructing a credit history becomes crucial. While the advice often targets students and young adults, its principles are universally applicable.

For students seeking insights into managing student loans and understanding their impact on credit ratings, exploring resources like ‘Student credit scoring’ can be invaluable.

I’ve recently moved to the UK – does my history from abroad count?

Regrettably, newcomers to the UK—even those with a solid credit record from their previous country—must essentially restart their credit history here, as credit scores do not transfer across borders. The same applies if you’re relocating from the UK to another nation.

In the United Kingdom, credit reference agencies like Experian, Equifax, and TransUnion compile credit reports solely based on UK financial accounts. Consequently, if you’ve recently arrived, your credit report may appear sparse initially, impacting your ability to secure credit.

Therefore, it’s crucial to begin establishing your UK credit history soon after your arrival. However, retaining records of your credit history from abroad can prove beneficial with certain lenders when making applications (and vice versa when leaving the UK).

If you find yourself in this scenario, refer to our comprehensive guide on Building your credit history.

2. It’s as much about ‘will you make the lender money’ as it is about risk

Many individuals contact us frustrated upon being declined – “I have an impeccable credit score and have never missed a payment, so why was my application rejected?” This frustration stems from a misunderstanding – lenders employ credit scoring to determine if applicants align with their criteria for profitable customers.

Certainly, someone deemed a high-risk borrower may be assessed as unprofitable by most companies. However, the potential for non-repayment isn’t the sole factor considered.

Consider a scenario where a bank seeks new mortgage clients. Acquiring these customers is costly. Instead, the bank offers a current account with a high interest rate on a small balance. Yet, upon application, rather than assessing you solely as a current account holder, they may actually be evaluating your potential profitability as a future mortgage borrower – an unfavorable assessment could lead to rejection.

The secretive nature of credit scoring complicates understanding these processes fully. Additionally, you might face refusal if you’re not projected to generate sufficient revenue for the credit card issuer…

Paying your balance in full each month, underutilizing your cards, or regularly transferring debt to 0% cards may make you seem like an ideal customer, but for credit card companies, this presents challenges. If they detect this behavior, it could result in rejection. The most desirable customers are those who consistently carry debt, never default, yet always meet the minimum payment.

However, this shouldn’t be used as justification for not paying off your credit card in full, especially if you lack a 0% card (though obtaining one is advisable). For further details, consult our comprehensive guide on the best balance transfer credit cards.

3. What lenders really know about you

Understanding what lenders see when you apply is crucial for portraying yourself favorably. It goes beyond the contents of your credit report; knowing this can help you present yourself positively.

+ The application form plays a crucial role in the process. It serves as the primary source of information for lenders, gathering essential details like your postcode, income, family size, purpose of the loan, and homeownership status.

Accuracy is paramount when filling out these forms. Even a minor mistake, such as stating a salary of “£3,000” instead of “£30,000,” can potentially derail your entire application.

Consistency is equally important. Fraud detection systems scrutinize applications for discrepancies, such as inconsistencies in job titles or varying phone numbers. These discrepancies could lead to complications that may not be immediately communicated to you. Therefore, it’s crucial to ensure uniformity and accuracy throughout the application process.

+ Your prior interactions with the lender play a crucial role. Companies utilize this information to contribute to your credit score. Consequently, individuals with minimal credit history might discover that their own bank is more inclined to extend loans compared to other institutions.

Conversely, individuals who have encountered issues with a lender previously may encounter greater challenges in securing approval from them again.

+ Equifax, Experian, and TransUnion manage credit files in the UK. These three major credit reference agencies gather and distribute information about UK individuals to potential lenders, all of whom typically use at least one of these agencies. The data they compile originates from several key sources:

Electoral roll details, publicly available, provide addresses and resident information.
Court records such as county court judgments, decrees, individual voluntary arrangements, bankruptcies, and other court orders relating to debts, reveal any history of financial difficulties.
Search, address, and association data include records of previous credit applications, addresses linked to your profile, and financial associations with other individuals.

Large gas and electricity providers conduct thorough credit checks, adding to your credit file.

Account information includes comprehensive data from banks, building societies, utility providers, and other organizations. This covers your credit and store card activity, loans, mortgages, bank accounts, energy usage, and mobile phone contracts over the past six years.

Approximately 350 million records are processed each month. The primary and most prevalent type of information is ‘default data,’ indicating instances where you have officially defaulted on payments.

Some lenders also share ‘full data,’ encompassing your overall account conduct from exemplary customer behavior to defaults. Certain credit card issuers disclose your repayment amounts, whether you pay the minimum or in full, and if you are utilizing promotional offers or cash advances. This enables lenders to discern between responsible borrowers and those exploiting the system.

Furthermore, payday loan data is typically reported, and doorstep lenders are legally obligated to share the information they hold on borrowers.

+ Some history from energy/phone providers. If you look to switch energy provider, or change from a prepayment meter to a normal credit meter (where you get a bill), it’s likely to leave a footprint as many providers now share credit report data.

+ Fraud data. If you’ve committed fraud (or someone has stolen your identity and committed fraud), this will be held on your file under the CIFAS section.

Plus, see what lenders and credit reference agencies DON’T know about you below.

4. What lenders don’t know – ignore conspiracy theories

Numerous individuals mistakenly assume that their entire life is documented in their credit reports, when in reality, these reports primarily focus on a narrow spectrum of financial details. However, the scope of information included in these reports has expanded significantly in recent years.

Let’s dispel some misconceptions. Here are several commonly believed items that people think are included in their credit reports, but are actually not.

– Your credit score varies among the three major credit reference agencies: Experian, TransUnion, and Equifax. Each agency employs distinct methods to evaluate your creditworthiness, resulting in potentially differing scores across the board. It’s worth noting that these scores are exclusively for your own reference; lenders do not base their decisions on these exact figures.

– Race, religion, ethnicity. These personal details about you are not held.

– Who you’re married to or living with. As long as you do not share any financial products together, which would establish a financial connection, there is no disclosure of information regarding family members residing with you or any other unrelated third parties, past or present.

– Medical record. Medical problems you may have had in the past aren’t listed.

– Salary. How much you earn isn’t on your file either, though you’ll usually be asked on the application form.

– Savings accounts. Since savings accounts do not function as credit products, they do not reflect on credit reports. Consequently, this information remains accessible solely to banks where you maintain savings accounts. Nevertheless, when opening a savings account, the provider may conduct a soft inquiry on your credit report to verify your identity and perform anti-money laundering assessments.

– PPI, bank charges & other reclaims. If you’ve attempted to, or have successfully reclaimed PPI or bank charges, it won’t appear on your credit files.

– Student loans (except pre-1998 starters). Unless you’ve faced a county court judgment due to non-payment, the Student Loans Company does not share any details about ‘income contingent’ student loans – the type that applies to all those who enrolled in university since 1998 – with credit reference agencies (refer to ‘Should I repay my student loan?’ for complete information).

– Soft searches. Certain lenders conduct a soft inquiry on your credit report to determine your eligibility for a loan and to offer you an interest rate. This information remains confidential and is not shared with other lenders during a formal credit check.

On the other hand, when you personally review your credit file, this action is recorded on your report. While it may be labeled as an “administration check” or “quotation search,” it doesn’t affect lenders’ assessments of your creditworthiness since they cannot access this information.

– Criminal record. No criminal convictions are listed.

– Council tax arrears, parking fines or driving fines. Local councils do not exchange information regarding your payment history, whether positive or negative. Being behind on council tax payments does not impact your credit score. Nevertheless, it is prudent to prioritize settling your council tax dues promptly, as many councils are prompt in pursuing legal action. Council tax arrears are handled as a criminal offense rather than a civil matter, potentially resulting in a criminal record.

Penalties such as parking fines or driving fines do not appear on your credit report. Despite being issued by courts, these fines are not considered credit-related matters and thus do not appear on credit reports.

5. Your credit report dictates the product and rate you’ll get

In today’s financial landscape, the focus is squarely on ‘rate for risk’. Essentially, this means that nearly every credit provider utilizes your credit history not only to determine whether they will extend credit to you, but also to set the interest rate you will be offered.

This practice is most noticeable when looking at representative rates advertised for loans. These rates typically apply to at least 51% of approved applicants. For instance, a lender might promote a 6% rate (known as the representative APR), but if your credit profile is less than ideal, you could end up being approved for the loan with a much higher interest rate, such as 40%.

This principle extends beyond loans to other financial products as well. For example, certain 0% interest credit cards may offer a shorter interest-free period if your credit history is deemed risky (assuming your application is accepted). Alternatively, you might be offered a different credit card product altogether from what you originally applied for. This underscores the critical importance of actively managing your creditworthiness.

6. Don’t panic if your credit score drops slightly with one of the agencies. It’s actually what’s on your credit report that matters

The notion that credit approval hinges solely on a singular score provided by a credit reference agency is inaccurate. At most, this score serves as a rough indicator of your creditworthiness. As mentioned earlier, lenders assess applicants based on three primary criteria when they seek credit:

Your application details. For example, your salary.
Any past dealings you’ve had with that lender. For example, old accounts.
The info contained in your credit reference reports.

However, the initial two factors do not contribute to your credit score, making it reliant on incomplete data. Moreover, various lenders prioritize varying criteria. Each lender evaluates your application against their own set of criteria for an ‘ideal customer,’ and these standards differ between lenders. Rejection by one lender does not guarantee the same outcome with another. Therefore, keep in mind:

Instead of assuming “my credit score is excellent, so I’ll be approved for any credit I seek,” it’s wiser to assess your standing with various lenders beforehand. One effective method is to utilize our credit card and loan eligibility calculators. This approach provides a clearer picture of the lenders who are likely to approve your application, without affecting your credit score as an actual application would.
If you consistently receive high approval rates, you’re on a good track – however, it’s unrealistic to expect approval for every credit card or loan application. If our calculator indicates that you may not qualify for several cards or loans, explore our advice on improving your creditworthiness.

The impact of a slight credit score drop is near meaningless

For those looking at their score and wondering ‘what is a good credit score’, it’s helpful to understand that each of the credit reference agencies has a different scoring range. These are as follows:

– Experian: 0-999
– Equifax: 0-1,000
– TransUnion: 0-710

In the realm of credit scores, the highest achievable ratings are 999, 1,000, and 710, respectively. Technically, zero represents the lowest conceivable score, although in practical terms, achieving such a score is impossible. If you possess minimal or no credit history, your score doesn’t default to zero; rather, it remains nonexistent until you initiate a credit application, prompting its generation.

These score ranges remain consistent whether you access your score directly from the credit reference agency or through intermediaries like Credit Club for TransUnion scores or Clearscore for Equifax scores.

Anyone holding a credit score should anticipate occasional fluctuations or decreases over time. Such changes need not trigger alarm, particularly if the decline is minor. Typically, a slight decrease in your score has negligible impact.

7. ‘I am not a number, I’m a free man!’ Er, not with credit scoring

Accessing credit is not a guaranteed entitlement. Despite government encouragement for lenders to extend more credit, particularly in sectors like small business and mortgages, the ultimate decision to lend remains in the hands of private firms.

This process heavily relies on automated and impersonal credit checks. Often, it is more cost-effective for lenders to deny credit to individuals who may actually qualify than to approve those who may not.

While it might seem unfair, the sentiment expressed in “The Prisoner’s” famous line – “I am not a number, I am a free man” – does not apply in credit assessment. In this context, individuals are reduced to numerical assessments, and it’s crucial to accept this reality, no matter how frustrating it may be.

8. Fraud scoring as well as credit scoring can cause rejection

When you apply for a product, it isn’t just a case of assessing whether you’re desirable, but also checking the application is legitimate. So, as well as the credit reference agencies, lenders also use completely separate anti-fraud agencies to try to weed out problems.

Here is how the two big agencies work:

National Hunter

This rarely mentioned system is much less factual, and so is prone to greater errors. However, it’s used by almost all major banks and building societies, receiving 96,000 applications a day, and has a real impact.

CIFAS: Lists confirmed past fraud

It is simply a record of known fraud, so if you’re on there, in general, you should know about it. It’s also the organisation to speak to if you think you’ve been a victim of ID fraud. Worryingly, any fraud committed at your address in the past could appear on your CIFAS file, even if it was nothing to do with you.

Find out more about how National Hunter works…

It operates by comparing your current application form with any previous applications you’ve submitted, aiming to identify factual discrepancies. While it doesn’t have the authority to reject your application outright, it does raise a red warning flag for lenders, a scenario that occurs about 7% of the time. Subsequently, lenders review the flagged information, deciding whether to disregard it or conduct further investigations. Importantly, lenders are prohibited from declining your application solely based on the National Hunter red flag.

Factors such as submitting multiple applications within a short span can also trigger alerts, although this is generally more tolerated in mortgage applications, which are more frequent, than in credit card applications.

Key considerations
Consistency is crucial, even over extended periods, when completing application forms. Using the same job title or phone number consistently across all applications is advisable.

How to review your National Hunter record
To review the data held about you, you can submit a subject access request, which is free under the General Data Protection Regulation introduced in May 2018. This can also be beneficial if you suspect you’ve been a victim of identity fraud.

You’ll receive a comprehensive list of the information you’ve provided on past applications. If you identify an error on your record, you cannot rectify it directly with National Hunter. In such cases, you’ll need to contact the lender who originally submitted the erroneous application to request a correction.

Find out more about how CIFAS works…

As with National Hunter, a lender can’t refuse your application based on the CIFAS data, but must investigate first. Hopefully, that should prove you were not the perpetrator.

How to check your CIFAS file

The info it holds on you should be contained on your credit report under the CIFAS section. You can do a subject access request for information CIFAS holds on you for free. Find out how to do this on the CIFAS website.

If you’ve a dispute with the information it holds, you need to contact the company that logged the information on your CIFAS file first. If you’re not happy with the response, you can ask CIFAS to investigate after you’ve received a final response letter.

9. Credit scoring affects far more than you think

Since the onset of the credit crunch, the significance of credit scoring in our financial landscape has markedly escalated. Below is a brief overview of how credit scoring impacts key financial domains.

Mortgages. If your credit score falls below par, expect rejection—it’s as straightforward as that. If you’re gearing up for a fresh mortgage or looking to refinance, it’s wise to begin tidying up your credit history at least a year ahead. For expert advice, peruse the comprehensive First-time Buyers’ Mortgage Guide or Remortgage Guide, available for free.
Credit cards. Your credit score dictates whether you’ll be accepted, whether you’ll be given promotional rates, and the APR you’ll be charged afterwards. See the Best balance transfers, 0% spending and Credit card best buys guides for full info.
Loans. Again, your credit score matters both for acceptance and the rate you’ll pay. See Cheap loans for help.
Utility bills. Data sharing has extended its reach to utility companies as well, underscoring the heightened significance of timely bill payment. Failure to do so could potentially jeopardize your eligibility for other forms of credit, such as loans, credit cards, or mortgages. Conversely, ensuring timely payment can positively impact your creditworthiness. The credit agencies are notoriously secret about which firms share data on whether their customers made or missed payments.
Mobile phones. When opting for a contract mobile phone, your creditworthiness is assessed (typically because the provider divides the handset cost across the contract duration, akin to a loan for them). If your application is declined, you’ll be unable to secure a contract and may need to continue using pay-as-you-go services instead.
Car and home insurance. If you opt to pay monthly, then in practice the insurer is loaning you the money to pay upfront, spreading the cost over the year and charging you interest (often at 20%+ APR), so it does a credit check first. See Cheap car insurance and Cheap home insurance.

10. Technology is changing credit scoring, and more is to come.

Increasingly, more lenders, particularly those in the fin-tech sector, are leveraging Open Banking (where you grant them access to your bank account or credit card information) to evaluate individuals. This approach offers real-time and customized information that can enhance or diminish your borrowing capacity, potentially reducing administrative burdens. Anticipate this trend gaining momentum in the years ahead.

28 tips to boost your credit rating

Lenders assess each applicant uniquely, making it more of an art than a science, particularly since lenders keep their criteria confidential.

However, there are actionable steps you can take to potentially minimize the likelihood of being rejected based on credit scores or fraud assessments.

TransUnion credit report. Your financial CV, a record of all your current credit relationships, it’s important to check it’s accurate.
TransUnion credit score. The usual indicator of how well you’re doing, though lenders don’t see this when you apply for credit, so don’t rely on it too much.
Eligibility tool to show your best credit deals. See how likely you are to get the top card and loan deals, without having to apply, therefore protecting your credit score.
Your key credit insights. What factors are impacting how you currently look to lenders, and how to make yourself more financially fanciable.

2. Boosting your credit score is a bit like going on the pull

Credit scoring works similarly, as different lenders have varying requirements. Therefore, one rejection doesn’t necessarily mean rejection from all lenders.

While many borrowers are deemed unattractive to most lenders (with most rejecting high-risk applicants), a select few might find favor with lenders who specialize in high-risk loans, as they can charge higher interest rates.

For those who face rejection, it’s akin to being told, “I don’t fancy you,” with no further explanation. Often, the only feedback you receive is, “Your credit score wasn’t high enough.”

The tips provided below aim to ensure that you present yourself in the best possible light to lenders. This way, when they assess you, you appear polished and appealing, with no embarrassing details like your skirt or shirt tucked into your pants unnoticed.

3. Check your credit report annually or before any major application

Your credit reports from Equifax, Experian, and TransUnion hold vast amounts of information about you. Errors can occur and potentially jeopardize your applications, underscoring the importance of regular reviews. It’s essential to meticulously examine each report to ensure accuracy.

Ideally, review your reports from all three agencies since various lenders may rely on different agencies. Do not presume that the information will be consistent across all reports.

Checking your credit report is always free. For comprehensive guidance on how to check your credit files without charge, refer to our detailed guide, which also provides insights into what to look out for.

4. Register to vote or it’s much harder to get credit

If you’re not on the electoral roll, it’s much harder to get accepted for credit, so sign up immediately. Don’t wait for the annual reminder or for the elections to roll around, apply at any time on Gov.uk.

Simply follow the instructions online – it’ll ask you a series of questions aimed at identifying you, and the local electoral borough you need to register with. Note that you’ll need your national insurance number to hand.

Many worry some councils sell on the data. But you can opt out of the open electoral register which can be used for marketing.

Credit reference agencies are allowed to use the full register which you can’t opt out of and that you should, by law, be on. The electoral roll can be a factor in scoring, but even where it isn’t, not being on it can lead to delays as lenders also use it to check your address and ID.

It’s worth noting the credit scores sold to you by credit reference agencies may show you’ve a perfect score without being on the electoral roll. Don’t let that fool you into thinking not being registered won’t affect your ability to get credit. It will, because lenders also need to be sure you are who you say you are.

5. Not eligible to vote in the UK? Add a note to your file saying you have proofs of residency

If you aren’t eligible to vote in the UK so can’t be on the electoral roll (mainly non-Commonwealth and non-EU foreign nationals), ask all three credit reference agencies to add a ‘notice of correction’ to your credit file saying you can provide proof of residency (utility bills, a UK driving licence, etc) to lenders. Lenders will see the note when reviewing your application and should then ask you to provide those proofs, helping you get credit.

Credit reference agency Equifax suggests you may want to say something like the following in your notice of correction:

“I, <full name>, with date of birth<dd/mm/yyyy>, am not on electoral register at my present address, because I’m not a British citizen. I’ve lived in my current address since <dd/mm/yyyy> and can provide utility bills or bank statements to prove this if needed. Please take this into account when searching my credit report.”

Some foreign nationals (from Republic of Ireland, some Commonwealth countries and EU citizens) are allowed to vote in local elections, and therefore can be registered on the electoral roll in the normal way.

6. Never miss or be late on any credit repayments – it can have a disproportionate impact

It might seem straightforward, but it really is. Even if you find it challenging, strive to avoid defaulting or missing payments as it can have a disproportionately negative impact. Even a couple of instances could lead to long-lasting issues. Defaults within the past year will particularly harm your financial standing.

A practical solution is to opt for direct debit for all payments, ensuring you never miss deadlines. While we typically advise against making only minimum repayments on debts (refer to our Minimum Repayments Danger guide), one strategy is to set up a direct debit for the minimum amount, solely to guarantee you’re always on time. Then, supplement this with additional manual payments each month.

If you’re facing difficulties, the age-old advice of “contacting your lender” holds true. Ideally, they will work with you to find a solution. Adjusting your repayment schedule is preferable to defaulting—while it may impact your credit score, it’s a better outcome compared to facing a county court judgment or similar legal actions.

7. Don’t let your partner or flatmate’s score wreck yours!

Whether you kiss, hold hands, live together, or even tie the knot, what truly binds your financial destinies is the presence of a shared financial product.

Being financially associated with someone through any product means their financial records can be scrutinized when assessing your own creditworthiness. Even a joint account for household bills with roommates can lead to joint credit scoring.

Hence, if your partner or roommate has a less-than-stellar financial history, it’s crucial to keep your finances completely separate. This strategy helps safeguard your access to favorable credit terms. In cases where your finances are already intertwined and you part ways with your partner or move out from a shared residence, it’s essential to proactively disentangle yourself financially. Requesting a notice of disassociation from credit reference agencies is a necessary step in this process.

Currently, only a few financial products establish a financial connection: joint mortgages, joint loans, joint checking accounts (not savings, as they do not impact credit files), and under specific conditions, utility bills. Being co-named on a bill with a roommate does not automatically create a financial association. This occurs only when the utility company recognizes you as a couple, such as addressing bills to “Mr. and Mrs.”

It’s important to clarify that what many perceive as a “joint” credit card does not technically exist. It remains one person’s account, with the other individual merely having a supplementary card for access.

8. If you’ve split up, ensure you financially de-link too

If you’ve recently separated from a partner with whom you shared financial responsibilities, such as joint accounts or a flat-share, it’s essential to sever your financial ties to avoid future complications. You can do this by formally requesting a notice of disassociation from the credit reference agencies once your financial links have been dissolved. This process involves writing to each agency individually or accessing their online forms to initiate the disassociation.

It’s crucial to note that if you still maintain a joint account with your former partner, the credit reference agencies cannot process the disassociation request. In such cases, the joint account must either be closed or converted into individual accounts before proceeding with the disassociation. For instance, any joint loans must be fully settled before requesting the notice.

To ensure comprehensive disassociation across all credit bureaus—rather than just one or two—you must contact each agency separately. This step guarantees that your credit history remains independent from that of your former partner, safeguarding your financial standing moving forward.

9. Minimise credit applications by using our free eligibility calculators

The only way to determine your likelihood of approval for a product is by submitting an application. However, each application leaves a mark on your credit report, and having too many within a short period can negatively impact future applications. This creates a dilemma because if you receive a rejection or an unappealing offer, the inclination is to continue applying.

In response, we have developed free eligibility calculators to assist you.

These calculators utilize a soft search method (visible only to you, not to lenders, thus causing no impact on your credit score) to assess your chances of approval for top credit cards (and loans). This enables you to refine your approach and minimize unnecessary applications.

Best balance transfer cards eligibility calculator
0% spending cards eligibility calculator
Airline cards eligibility calculator
Travel credit cards eligibility calculator
Credit rebuild cards eligibility calculator
Money transfer cards eligibility calculator
Balance transfer & spending cards eligibility calculator

We also have a Loans Eligibility Calculator, which’ll help you find your chances of getting different loans…

Loans eligibility calculator

Simply input your information once into the eligibility calculator to determine your approval odds for all cards within the selected category. Please note that the Loans Eligibility Calculator operates independently. Therefore, if you are interested in assessing eligibility for both credit cards and loans, you must use each calculator separately.

What are good odds?

Some individuals may discover they are pre-approved for credit cards or loans. Being pre-approved signifies that you are likely to receive that card or loan, pending the lender’s verification of your identity and fraud checks.

Conversely, if you’re not pre-approved, having a likelihood above 70% indicates a strong probability of securing the credit (although it may not come at the advertised interest rate). A probability exceeding 50% is also reasonably favorable. Anything lower, and you’re venturing into riskier territory.

However, don’t let these probabilities deter you from applying for essential financial products like balance transfers. It’s common to hear people say, “I didn’t apply because I only had a 20% chance and didn’t want to risk rejection.” Yet, if your chances are 20% and it’s for a critical product such as a top-notch balance transfer to reduce your debt expenses, consider this: two out of every ten applicants in similar circumstances will be approved, and you could be one of them.

10. Check addresses on old accounts

It may seem strange, but an incorrect address can have a disproportionately large impact. For instance, if you have an old mobile phone contract or credit card that you no longer use but is still technically active on your credit report with an outdated address, it’s important to verify that your current address is correctly listed.

If these accounts are still marked as open and show a different address, it can hinder your applications during identity verification checks. Review your credit report thoroughly and update the address for every active account.

We’ve heard of cases where individuals were denied mortgages because of this issue. Even worse, they were unaware of the specific reason, which can be incredibly challenging to uncover.

11. Don’t ‘spend’ your applications too often

Every time you submit an application for a credit product—whether it’s a credit card, a contract mobile phone, monthly car insurance, or any other type—it leaves a mark on your credit file that lasts for a year.

Submitting too many applications in a short period can lead to rejections because it gives the impression that you’re overly eager for credit. Therefore, if possible, spread out your applications and avoid applying frivolously.

In fact, it might be helpful to think of applications as ‘expenditures’. Is it truly worthwhile to use up an application on your current endeavor, or would it be wiser to reserve it for something more significant?

For instance, if you’re interested in obtaining a cashback credit card and have no other impending credit needs for the next six months, it makes sense to proceed with your application. However, if you’re planning to apply for a mortgage soon, it’s prudent to wait until after completing that process. Setting priorities is crucial.

Similarly, if you apply for a low-interest credit card and find that the credit limit offered isn’t sufficient, refrain from immediately applying for another one. Refer to the Low Credit Limit Guide for additional guidance on this matter.

12. Always check your credit files after rejection

There’s a nightmare scenario you need to avoid called the rejection spiral. It works like this:

“This continues, until finally you check your files and get the error corrected. So… You apply again. You’re rejected, not due to the error, but because of recent ‘searches’.”

If your application is declined, immediately verify the accuracy of your documents. Otherwise, multiple applications can adversely impact your credit score over time due to increased inquiries, exacerbating the issue. The lender will inform you of the specific credit reference agency they used to evaluate your information, so focus your efforts there.

Following an error, it is possible to have subsequent inquiries removed, but this requires negotiation with both the agency and the lender, which can be challenging.

The cycle of rejection also applies if you apply for credit typically reserved for those with an excellent credit score when yours is merely good (unfortunately, many lenders do not disclose their criteria, making it hard to anticipate).

If you are considering applying for a new credit card, consult our comprehensive guides on the best credit cards. Our eligibility calculator provides insight into which loans and cards are likely to approve your application, as well as those that may reject it.

13. Use a credit (re)build card to build a history & restore past issues

Credit scoring revolves around forecasting your future behavior based on your past financial track record. Individuals with a negative credit history often perform poorly in assessments, but those with limited credit history face challenges in prediction.

Establishing a solid recent credit history is crucial to demonstrate responsible credit management. However, the paradox arises when a poor credit history makes it challenging to obtain credit.

A viable solution involves obtaining a credit rebuilding card. Refer to the comprehensive guide on credit cards for bad credit for detailed assistance, protective measures, and top recommendations.

This type of card typically features a high annual percentage rate (APR), such as 35%, and is accessible to individuals with a poor credit background. Yet, by ensuring full repayment each month, preferably through direct debit, and avoiding cash withdrawals, you can evade interest charges effectively.

Simply allocate around £50 monthly expenditure on the card. If maintained without issues over approximately six months, significant improvements should become evident. After a year, notable progress should be noticeable.

Of course, if you possess an unused credit card already, you can adopt the same strategy with it, eliminating the necessity for a new application.

14. Time it right – when you apply can have a big impact

Issues like county court judgments and bankruptcy remain on your record for a period of six years, while information regarding applications persists for one year. Therefore, if you’re approaching the point where these past issues will expire, delaying your application can be advantageous. It’s advisable to review your credit report to verify these specifics.

15. Don’t withdraw cash on credit cards

Doing this can be costly because the interest rates are typically higher, and you incur charges even if you pay off the balance completely every month. Importantly, many lenders view this behavior as indicative of ineffective financial management.

The sole instance where this differs is when you withdraw cash using a specialized card while overseas. Refer to our guide on international credit card ATM withdrawals for comprehensive details and why they’re relatively manageable.

16. Paying your rent on time can boost your credit rating

Regrettably, shelling out £1,000 each month for rent doesn’t necessarily demonstrate your capability to handle a £1,000 monthly mortgage payment.

However, there are now available programs that cater to private renters and social housing tenants aiming to bolster their credit ratings without any cost.

Typically, you must be enrolled in these programs for a minimum of six weeks for your rental payments to reflect on your credit report. Some individuals have noted substantial enhancements in their credit scores from credit reference agencies, with one person seeing a remarkable 250-point increase over a span of four months.

It’s important to emphasize that the benefits of these programs hinge entirely on consistently paying your rent on schedule. Missing a payment will be noted on your credit file, potentially deterring lenders when you apply for credit.

There exist three free options to consider – one necessitating your landlord’s enrollment and two allowing you to enroll independently.

Scheme that your landlord can sign up to:

Rental Exchange Initiative. The Rental Exchange Initiative enhances your credit profile by incorporating your rental payments into your Experian credit report. This allows lenders using Experian to verify your consistent rent payments. Your landlord must enroll in the initiative, which is free for both of you, with the benefit of promoting punctual rental payments. Here’s how to encourage them to join:
- For residents of social housing, inquire with your housing provider about their participation. If they are enrolled, your rental payments will automatically be recorded (you can opt out if desired). If not, consider sharing this information to encourage their involvement.
- If you’re a private tenant, check if your landlord or letting agent is part of the initiative, although this is less common unless they manage over 500 properties. If they participate, request them to include your payment details. If not, you can motivate them by sharing details about the Rental Exchange Initiative.

Schemes that you can sign up to:

Canopy. By enrolling and linking Canopy with your bank account used for rent payments, Canopy employs Open Banking to authenticate and oversee rent transactions. These payments are subsequently incorporated into your Experian credit report at no charge. If desired, you can opt to have them included in the records of all three credit bureaus, though this service costs £7.99 per month (or £84 per year, which equals £7 per month if you opt for the annual subscription).
Credit Ladder. Another option available is Credit Ladder, a service that allows you to report your rent payments at no charge to either Experian, Equifax, or TransUnion (the choice is yours). If you prefer, you can have these payments included in the records of all three credit bureaus, though this entails a fee of £8 per month. Alternatively, you can opt for an annual subscription at £60, which averages out to £5 per month, offering potential savings for those willing to commit to a year.

As lenders sometimes check two credit reference agencies when deciding which borrowers to accept, if you use Canopy for Experian, you could then use Credit Ladder for one of the other two agencies, getting you two out of three agencies free.

17. Payday loans can kill mortgage applications

Certain payday lenders misleadingly claim that taking out and promptly repaying their loans can enhance your credit score by establishing a track record of improved repayment. While this holds some truth for individuals with exceptionally poor credit histories, utilizing a credit rebuilder card is generally more effective and economical.

However, if you’re aiming to secure a mortgage, you unequivocally need a credit score significantly better than “abysmal”. Hence, it’s crucial to steer clear of payday loans altogether. This advice isn’t solely due to their exorbitant costs (refer to our Payday loans guide), but also because certain mortgage underwriters have explicitly stated they reject applicants who have recently used payday loans, citing it as indicative of poor financial management.

In the past, numerous individuals were improperly sold payday loans that were beyond their means to repay. If you find yourself in such a situation, you may be entitled to reclaim hundreds or even thousands of pounds. Furthermore, you can request the removal of any adverse payment records related to loans deemed ‘unaffordable’ from your credit file. For detailed steps, consult our comprehensive guide on reclaiming payday loans for free.

18. You can ask why you were rejected

If you apply for credit and are rejected, lenders are supposed to give you an explanation if you ask for one. It’s worth doing, but usually you just get “because you failed to meet our credit scoring requirements”, which makes a chocolate teapot look useful.

19. Never pay for a credit repair company

If you see these advertised, avoid them. Either they’re doing nothing you can’t do yourself with ease, or they’re using illegal methods that will bite you on the bum. If you’re struggling and need personalised, professional help, see a non-profit debt-counselling agency.

20. Stability counts, use consistent details between applications, don’t overchurn

Homeowners, as opposed to renters, and individuals with regular employment, rather than those who are self-employed, tend to have an easier time securing credit. Continuity in employer, banking institution, and residence also enhances creditworthiness.

Consistency in personal information across applications is paramount. It’s essential to maintain uniformity over extended periods when completing forms. If you have multiple job titles or phone numbers, strive to use the same ones consistently on every application. Using different details could trigger fraud detection mechanisms.

While lenders cannot solely reject your application based on this, they are obligated to inform you if National Hunter contributed to their decision to decline your credit request.

21. Life change coming? Apply before that happens

You become more desirable to lenders when you have a steady income, making it prudent to apply for loans before taking maternity leave, a break, or anticipating possible job cuts. However, honesty about your circumstances is crucial and never should you misrepresent your situation.

22. Should you cancel unused credit and store cards? Sometimes…

Determining whether canceling old credit cards will positively or negatively impact your future creditworthiness isn’t straightforward.

Typically, if you possess numerous inactive old cards, it’s advisable to consider canceling some, particularly those you rarely monitor, as they could be susceptible to fraudulent activity. Nevertheless, there are certain cards you should prioritize retaining…

The card that has your highest credit limit. This particular card is likely viewed favorably on your credit report, indicating that other lenders have confidence in your ability to manage substantial credit. It’s advisable not to close this card unless you possess other cards offering comparable credit limits.
The card you’ve had the longest. Lenders prefer seeing consistent financial histories reflected in your credit report. For instance, if you’ve maintained one credit card for a decade while your other cards are relatively new, closing the older card could potentially lower your credit score slightly. However, if all your cards have similar ages, this action is unlikely to impact your creditworthiness significantly.
The only credit card you have. If you only have one card, it’s best not to shut it, as then lenders wouldn’t have any evidence about whether you manage card debt well.

If you’re not using the card, it’s likely worth adding, say, £50 of normal spending each month and paying it off IN FULL. This will help keep your credit history current.

Another factor to consider when deciding whether to retain a credit card is your ‘credit utilization,’ which refers to how much of your available credit you are currently using. Ideally, you should aim to keep this figure at or below 25%. It’s also beneficial to distribute your debt across multiple cards rather than concentrating it on just one.

For instance, suppose you have maxed out two cards with limits of £2,000 each, and you also have a card with a £6,000 limit that you’re not utilizing. In this scenario, your credit utilization stands at 40% (with £4,000 in debt against a total credit limit of £10,000).

If you were to close the card with the £6,000 limit, your credit utilization would spike to 100%, which could raise concerns among lenders. They might interpret this as a signal that you are overly reliant on credit. Therefore, it would be prudent to keep the £6,000 limit card open (while also working towards reducing the debt on the other two cards).

How do I cancel a card properly?

Here’s a clear distinction that needs to be highlighted: cutting up a card is not equivalent to canceling it!

When you cut your card in half, you’re simply preventing its use, but the credit card account remains active and will reflect as such on your credit report.

To properly close the account, contact the card company directly and request cancellation. It’s advisable to request written confirmation as sometimes companies may overlook your request.

Even after cancellation, the account might remain open temporarily to process any pending transactions. Always review your final statement carefully to ensure everything has been processed. Additionally, check your credit report a few months later to confirm closure.

In essence, to add a layer of complexity: cutting a card isn’t the same as canceling it, and canceling doesn’t always mean immediate closure.

Interestingly, attempting to cancel may yield unexpected benefits. Often, credit card companies may offer special deals to persuade you to retain the card. Such offers are particularly valuable for those who still anticipate borrowing needs.

23. Experian Boost can give a limited, er, boost.

Experian Boost* is a complimentary tool that leverages open banking data to demonstrate to lenders your consistent, punctual payments for various expenses like council tax, Netflix, Spotify, and even routine savings transactions.

Essentially, it compiles a distinct record of regular payments made over the previous 12 months that typically aren’t documented in your credit report, encompassing the categories mentioned earlier.

While there’s no assurance that using Boost will definitively enhance your credit score, Experian assures users that it will never negatively impact their credit score, making it a worthwhile option to explore.

Leeds Building Society made headlines in 2023 by becoming the inaugural major UK mortgage provider to integrate Experian Boost into its lending criteria. This innovative approach involves factoring in enhanced credit scores from Experian Boost when evaluating mortgage applications.

Experian Boost is anticipated to provide greater advantages to first-time homebuyers compared to existing homeowners, as the impact of repaying an ongoing mortgage typically holds more weight on a credit report than managing regular direct debits. However, homeowners looking to remortgage may also see some benefits, albeit to a lesser extent.

For comprehensive details on this development, refer to our coverage on how Boost could influence your mortgage application with Leeds Building Society.

We will keep this resource updated should other leading lenders adopt similar practices.

24. Reduce your debts with savings, if you have them

Lenders assess your level of outstanding debt when evaluating your financial profile. Excessive debt can significantly impact your creditworthiness. Imagine being in their shoes—would you feel comfortable lending to someone burdened by numerous existing debts? Therefore, reducing your debt load strategically is wise.

Moreover, it’s generally advisable to use your savings to settle high-interest debts (learn more in the article “Pay off debts with savings”). This approach holds especially true when seeking a mortgage. The less you borrow relative to your home’s value, the more favorable terms and offers you can secure.

25. Default on your credit report? Mitigate the damage

One of the significant challenges individuals encounter involves defaults appearing on their credit reports – indicating instances where payments were not made as required. These defaults, particularly if recent, can severely impact new credit applications.

If you believe the default is unjustified, learn about challenging unfair defaults. However, if the default is legitimate, your options become more constrained. Credit reports serve to present lenders with your financial history. Addressing this issue involves two primary steps:

Step 1: Negotiate with the lender. If you’re willing to settle the debt, whether partially or in full, initiate discussions with the creditor. You may also negotiate to have the default removed from your credit report as part of the settlement terms. If uncertain, consider seeking advice from a nonprofit debt assistance organization.
Step 2: Let time heal it. If negotiations with the creditor prove unsuccessful, another approach is to let time gradually lessen its effect – defaults remain on your credit report for six years. However, their impact diminishes over time, particularly if your recent credit conduct has been impeccable.

26. Unfair default or other error on your credit report? Fight it

If you encounter an erroneous default on your credit report, it’s crucial to challenge it promptly since it could hinder many of your applications. Verify whether the same default appears on reports from the other two credit reference agencies.

Erroneous defaults may arise due to various reasons. It might be a mere administrative mistake by the credit reference agency, in which case contacting them should help resolve the issue – they typically offer assistance in such matters.

However, it’s more probable that the lender mistakenly reported the default, or there was a disagreement with the company regarding the debt’s validity.

Follow this structured three-step approach:

Step 1: Complain to the lender that added the false info to your report. Contact the company responsible for placing the default on your credit report. Request the removal of the default, clearly outlining your reasons for considering it unjust. Maintain a professional and courteous tone in your communication. Emphasize your intention to escalate the matter to the Financial Ombudsman Service if the default remains unresolved.
Step 2: Add a notice of correction to your report.If these steps do not resolve the issue and the default remains, consider adding a clarification to your credit report outlining the situation. For instance, you could explain, “This account was joint, and the debt accrued after separating from my former spouse,” or “The debt was for a pair of shoes ordered from a catalogue that never arrived, leading to my decision not to pay.”Avoid excessive detail when describing the error. Stick to being brief and factual.While adding a notice of correction may slow down credit applications because most companies will review them manually rather than relying on automated algorithms, it typically isn’t a concern if a significant default would otherwise hinder your chances of obtaining credit.
Step 3: Escalate your complaint to the relevant ombudsman.When addressing issues related to credit reports, which often involve banks, insurance firms, or lenders, it’s advisable to direct your concerns to the Financial Ombudsman. They have the authority to review cases where defaults are deemed unjust and can request the complete removal of associated records, along with compensatory measures if deemed necessary.If your dispute pertains to an energy provider incorrectly claiming you owe them money, thereby impacting your credit report, you can seek resolution through the Energy Ombudsman. Similarly, for issues involving broadband or mobile service providers, the Communications Ombudsman offers assistance. Both entities have the power to mandate the removal of inaccurate information from your credit report.For detailed guidance on how to lodge complaints, refer to our comprehensive Complaining to the Financial Ombudsman guide.

27. Paying insurance monthly affects your credit score

Opting to spread insurance payments across monthly instalments triggers a ‘hard search’ that impacts your credit score. To mitigate this, it’s advisable to pay upfront whenever feasible, as some insurers levy APRs as high as 40% for monthly payments.

Another concern for many is the impact of comparison sites on their credit rating. These platforms share your details with multiple insurers to generate quotes and assess your ability to manage instalments based on your credit report.

Fortunately, these assessments are considered ‘soft’ searches, visible only to you and not affecting your credit score or visibility to other lenders.

For further insights on this topic, including strategies to navigate it effectively, consult our comprehensive Car Insurance Guide.

28. Ask for a ‘quotation search’ or ‘soft search’ if available

If you’re looking to get a precise loan quote, request the lender to perform a ‘quotation search’ or ‘soft search’, rather than a ‘credit search’. This ensures that although an inquiry will show up on your credit report, it remains visible only to you. Lenders themselves cannot see it, so it will not affect your credit score.

Regrettably, not all lenders have embraced this approach yet, but it’s advisable to inquire about it. If not available, weigh whether pursuing a quote is worthwhile – if the chances of securing the product are slim, it may not be worth your effort.

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