Today we’re going to be discussing something that plays a significant role in our lives that not everyone might be aware of. Credit scores, ey? Can’t live with them, can’t live without them.
Whether we like it or not, credit scores play a major role in our lives; being accepted for credit, financial health and freedom with our money. And while improving your credit score won’t happen overnight, there are some things you can do to start seeing improvements in a few months down the line.
Here are some 8 tactics to try if you’re looking to increase your credit score quickly.
While we are confident in these strategies on how to increase your credit score quickly, the term ‘quickly’ is very much relative to the context of the topic, and with the topic being credit scores nothing moves particularly fast.
If your credit score is ‘bad’ or ‘very poor’ this may mean there are some immediate issues weighing you down, fixing these ASAP can see considerably fast movements on your score.
You won’t be seeing results overnight that’s for sure, but give it a few months (3-6 just to be on the safe side), and you will hopefully start seeing an upward trend that will only lead to more and more success.
A great start to improving your credit score is to gain a better understanding of what you’re doing right and wrong. This will help you to be consistent in your positive behaviour and cut back or eliminate any bad habits altogether.
Each credit report provider uses a, or a combination of different credit agencies to source their information and utilise different dashboards, insights and tips to provide a unique, tailored experience.
Requesting your credit report doesn’t impact your credit score, so go nuts and find out exactly what’s holding you back. The best part? Requesting your credit report is completely free.
Requesting your credit report can give you a holistic overview of what makes up your credit score. Take the time to study each section, understanding what factors are most impactful, and in essence how long it’s going to take to improve your credit score.
Another reason you should request a credit report is to ensure all the information that has been collected is 100% accurate. Any discrepancies, false missed payments, can and should be disputed and removed from your report.
A dispute is a fairly straightforward process, in which you review your report, identify any wrong information and submit your dispute. While this can play out in a few different ways, the ideal outcome is for the wrong information to be amended or removed altogether.
Disputes are a fairly quick process, with most disputes being resolved within 30 days. Meaning any negative information that could have been holding you back is gone, this may lead to improvements within your score pretty quickly.
More than often credit bureaus don’t have all the information that you would expect them to have. Don’t get us wrong, they have A LOT of information, but they are sometimes missing key tidbits that could see improvements to your credit score.
One of those areas are rent and utility payments, these are usually not included in your report and not always considered when creating your score. These items typically don’t appear because landlords don’t generally report them.
This is one of the easiest ways to quickly improve because you’re already making these payments, they’re just not being taken into consideration. This can only help in proving your ability to make repayments consistently and in full, on time.
There are a couple of services you can utilise to ensure all your payments are recorded, while some do require a small monthly fee it is very much worth it to provide this information.
If you’re not sure whether you or your landlord is already signed up you can use Credit Club for free to check. If you’re looking to sign up you can invest in any one of these platforms; Credit Ladder, Canopy.
Chances are if you’re in social housing or council your information may already be submitted as part of The Rental Exchange scheme. If not, and you have a private landlord, it’s a simple case of asking them to sign up.
If one of the main areas holding you back is credit utilisation (or amount owed) it is well worth your time to at the very least review a credit increase. Credit utilisation makes up 30% of your FICO score, which is the second highest contribution.
For example, if your combined credit limit (this can be between multiple cards) is £2,000 you would ideally want to keep your allotted spending below £1,000 as a maximum but ideally below £600.
As a rule of thumb you should aim to keep your overall credit utilisation under 30% to show that you’re not overly reliant on credit.
Requesting a credit limit can be a quick way to boost your credit score, on the basis that your balance stays the same. This can immediately with no effort on your part lower your credit utilisation, thereby possibly earning you some brownie points.
Ideally you’d be looking for a credit limit increase that doesn’t generate a “hard enquiry” as too many of those can, again, appear as though you’re overly reliant on credit. So if you’re requesting an increase, make sure to spread out any other enquiries for credit such as loans, credit cards and car leasing etc.
Going back to FICO, there are various factors they take into account when building your credit score, amounts owed, payment history, length of payment history etc. but one that you can make immediate improvements to is your credit mix.
Credit mix makes up 10% of your score and is possibly one of the easiest ways to boost your credit score quickly.
Credit reference agencies like to collect as much information on you as possible, and that is heavily reliant on what information you have available. The more data you can provide, the more accurate your credit score will be.
One of the ways you can provide more information is through proving your ability to make repayments in a variety of different credit types.
There are three types of credit in particular you want to pay attention to:
Revolving credit is continuous, the creditor provides a maximum limit such as on credit cards and you’re able to spend as much as you’d like – while making the minimum payment each month.
Instalment credit is borrowing a specific amount and then paying the money back in agreed instalments over a fixed period of time. Such as a mortgage or a car loan etc. if you make all the payments on time, you should have paid the entirety of your debt by the time you reach the end of your contract.
Open credit differs slightly from the other two in the sense that it requires payment in full each month, but that amount can change. Examples of this can be utility bills such as gas and electricity, in which you’d use a certain amount and they’d bill you based on your usage.
Having at least one of each type of credit can prove your trustworthiness in a mixture of different situations – eliminating any doubts or question marks in the eyes of lenders.
Following on from the previous point, holding different types of credit can work to improve your credit score. One of the easiest ways to do so is get a credit card.
Of course there are numerous factors that you should consider before getting a credit card, this is merely a suggestion and isn’t suitable for everyone. Consider your ability to make repayments, if you’re likely to use it to buy things with money you don’t have, or if you’ve recently made hard enquiries for other credit.
Compared to other types of credit, a credit card is most likely the fastest means of improving your credit score by proving from day one that you can handle your finances.
However, depending on your credit score to begin with it can be difficult to get approved. This doesn’t mean credit cards are completely off the table, there are different ways you can go about this to still benefit.
This is an easy way of benefitting from a credit card without having to even make a payment yourself, you don’t even have to know the pin.
Becoming an authorised user is the next best thing when it comes to improving your credit score, and is a good substitute if you’re struggling to get approved for a credit card.
First of all, you need to find someone that you’re ideally very close with and have a mutual trust in place. This is important as both parties need to be aware of the agreement, especially on their part it may be easier for them to digest if they understand you won’t be using their card – just benefitting from it.
Another important point to make is, this person must have very good credit and financial health. There is no point in becoming an authorised user on someone’s account who has a bad credit score and has a poor handling of their money – this will only work to negatively impact you.
Once you become an authorised user, you will see a direct benefit from their current credit performance. The benefits they see from making payments on time, utilising a low amount of credit etc. will see you with a boost to your credit score too.
Credit builder cards are particularly helpful for those that are starting from scratch, as well as those that have a poor credit history and are unlikely to get accepted for a mainstream credit card.
Credit builder cards are much like normal credit cards, but with the sole purpose of boosting your credit score in mind. These cards as many would suspect come with certain conditions, such as a lower credit limit and higher interest rates – also missing out on the promotional benefits of credit cards, such as rewards and 0% balance transfers.
Even though credit builder cards are easier to attain, it is still worth checking your eligibility beforehand. Because an application for credit that has been denied can negatively impact your credit score and it’s best to avoid that if possible.
If you’re unlikely to get accepted it’s probably best to try becoming an authorised user, or applying for a secured credit card first and possibly trailing back in a year or so.
A secured credit card, much like a credit builder card and becoming an authorised user is a substitution for a standard credit card.
A secured credit card works much in the same way that a credit card does with some key differentiating factors. A secured credit card requires a deposit when you open the account, this is usually proportional to the credit limit you will receive.
The deposit works to reduce the risk to the credit issuer, as if you’re unable to make repayments the issuer will take away your deposit. In time, your credit score will increase to the point where you can get your deposit back and apply for a standard credit card.
Trailing back to point three, credit utilisation contributes a large portion of your credit score and by improving on these can be a surefire way to boost your credit score quickly and effectively.
If you have a limit of £1,800 and your balance is £1,600 you are well over the advised utilisation rate. Ideally you should be under £900 (50%), if not £540 (30%). Any spare money at the end of the month should be put towards paying off your balance.
Additionally if you have any savings laying around that aren’t typed up in any way you should consider using this to pay off some, if not all of your balance. This can be a great way to improve your credit score quickly.
It should be noted that this only applies to revolving credit such as credit cards, instalment credit should not be paid off in one go in full – having revolving credit ticking away in the background is good for your credit score, as long as you’re consistently making payments.
This is much less of a means to increase your credit score quickly and more general advice to maintain your newly formed, strong credit score.
This is a mistake that happens far too often, accounts closing. Length of credit history makes up 15% of your credit score and we would argue is a pivotal factor in determining your credit score by providing relevant, up-to-date information.
This is particularly common for people who have numerous credit cards, current accounts etc. and eventually start to forget about some of the older accounts. While you don’t need to be using them as frequently, it’s vital that you’re still using them in some capacity each month.
Otherwise the issuer may recommend decreasing your credit limit, or shutting the account down altogether. Each of those events could see an immediate decrease in your credit score, due to not only tripping up one but two parts of your FICO score, length of credit history and credit utilisation.
Making a u-turn right back to step four, considering different types of credit can be an essential way of not only quick wins, but continuing on the road to a better financial future.
One of the types of credit that can help you see improvements to your credit score is car leasing. This is a type of instalment credit much like a loan or mortgage in which you would borrow a certain amount and pay it off in an agreed period of time.
Car leasing is accompanied by a tonne of benefits, with one of the most prominent giving a boost to your credit score – particularly if you’re on the lower side of the spectrum. Through regular repayments enabling you to prove your ability to make repayments, this can see a nice improvement to your credit score.
The best part? Here at Wheels4Sure we are lenders that specialise in providing to those with bad credit affordable car leasing. And with a 95% acceptance rate, you’ll be kicking yourself if you turn away the opportunity to not only drive a brand-new car, but build your credit score on the side.
We think that’s what you would call a win-win situation.
Building your credit score fast is a feat that unfortunately can be quite short lived, any immediate fixes that are holding you back can see pretty fast boosts to your credit score which will then revert back to hard work, time and patience.
If you’re wondering how to improve your credit score quickly or simply want to find out more about what we offer simply fill out our enquiry form, or call us on 0203 823 1010 to speak to one of our personal advisors.
If you’re curious as to what cars we have available, browse our range of car leasing deals. We’re confident we’ll have something to catch your eye, possibly in the form of a Mercedes, or even a Renault Clio – we’ll let you decide on that one.