According to a report by consumer reporting agency Experian, credit scores across the UK have improved year-on-year.
People living in the South East have the highest average credit scores of 795 in the country, which falls into the ‘fair’ category. This was followed by the South West at 788 and London at 784.
In contrast, the North East has the worst credit score in the UK at 727. What’s more, no region can boast more than just a ‘fair’ rating.
Therefore, it goes without saying that no matter where someone lives, their credit score could do with improving. But how do you go about this? Here’s five tips to bear in mind.
- Register to vote
If you’re not on the electoral roll, it’s much harder to get accepted for credit. Lenders use this alongside additional information to confirm your identity, check that you are who you say you are and as a proof point of stability.
You’re also much less likely to be accepted for a loan if the address on your credit history, or the address where you’re applying for a loan, doesn’t match the address where you are registered to vote.
- Manage your debts
Failing to pay bills on time or using payday loans can have an extremely detrimental impact on your credit score. After all, any missed payments stay on your record for up to six years.
One easy way to manage your debt is to pay everything by direct debit, as you’ll never miss or be late. And if you need to cut credit card debt costs, check to see whether you can shift debt from one card to another cheaply, as this means you won’t need to apply for new credit.
- Avoid a thin file
Having no debt at all isn’t as advantageous as you might think. This is known as having a ‘thin file’ – if you’ve never had any credit products before, lenders won’t know whether you can handle your debt well and may not be willing to approve you.
If you have a thin file, take out a credit card and use it sensibly. Repay more than the minimum payment amount each month or set-up a direct debit for utility bills to boost your credit score.
- Check your partner or flatmate’s score
If you are financially linked to someone on any product, their file can be assessed and looked at as part of your application. Even a joint bills account with a flatmate can result in being co-scored. Therefore, it makes sense to keep your finances separate if a partner or flatmate has a poor history.
Currently, only four products can infer financial linking – a joint mortgage, a joint loan, a joint bank account (except savings), and in certain circumstances, utility bills.
- Don’t apply for too many products
Applying for lots of different loans or having hard searches on your credit file will immediately tell lenders that you aren’t very good at managing your money.
This is why you should make sure that providers show you a personalised rate using a soft search, which won’t mark your credit file. If your score doesn’t turn out to be the best, then you may want to avoid hard searches altogether.