New Year Finances: 10 ‘simple’ ways that may improve your credit score
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With Christmas behind us and a new year ahead, many could be turning their attention to improving their finances. As we step into 2025, there’s no better time to make boosting your credit score your top New Year’s resolution.
In light of this, Capital One UK has revealed some ‘simple’ tips that may help you boost your credit score this year:
Ensure you are on the electoral register – Whether you choose to vote or not, it’s so important for your credit score to ensure you register on the electoral roll at your current address.
Make regular on time payments – Aim to pay your balance on time and in full. This shows lenders you’re reliable and capable of handling credit. A good way to make sure you pay on time is to schedule payments towards your credit account, for example through direct debits, or putting reminders on your phone to get notifications of when you need to pay.
Check for errors on your credit report – The smallest errors can impact your score and could be enough to make a lender refuse you credit. It could be as small as a typo in your address, or a debt that has been paid off but still showing as outstanding. If you spot a mistake, it’s important to ask the credit reference agency directly to change it, if it’s a mistake then it’s their responsibility to correct this. If there is any negative information on your report that occurred during a special circumstance, for example you lost your job or were hospitalised, you can reach out to the credit reference agency and request them to add a Notice of Correction to your report.
Get alerts when your credit score changes – Not only does it help you manage your own credit score by checking it frequently, but it also helps you monitor for any fraudulent activity. Fraudsters can use your personal details to take out credit in your name without you being aware, this is known as identity theft. If you see something you don’t recognise on your credit report, it’s important to reach out to the provider’s fraud support team to report this immediately.
Account longevity – The longer you keep your current account and credit accounts open, the more likely a lender will see you as reliable – as it could indicate you’re able to manage your finances correctly. Most credit scoring systems reward you for having long-standing accounts, so before you close an account after a couple of months, think how this could have a long term effect on your credit score.
Think about your credit utilisation – Your credit utilisation is effectively the percentage you actually use of your cumulative credit limit. If your card has a limit of £1,000, and you end up only using £500 of that, your credit utilisation score would be 50%.Not utilsing 100% of your available credit can be viewed positively by lenders.
Avoid changing address frequently – Whilst this isn’t always possible, if you are renting, try avoiding moving every couple of months. Lenders like stability, and the longer you are at an address, the less likely it’ll influence lenders’ decision to offer you credit.
Try a credit builder credit card – Having little credit history can be one of the biggest barriers to getting a good credit score as lenders struggle to assess you. Credit builder cards could help build your credit score and improve your chances of being offered credit limit increases, should you use your card sensibly. This can be as simple as making your monthly minimum payment on time and staying below your current limit. It’s important to note that if you don’t do these things, you could harm your credit score.
Manage your overdraft well – Some bank accounts have 0% interest rates on their overdrafts, but it’s important to see it as there for a rainy day only, not as part of your regular budget. An overdraft is a loan, and going over your arranged overdraft limit, or regularly using an unarranged overdraft, can negatively impact your credit score.
Research before getting a credit card – Whenever you apply for a credit card or any other form of lending, it can leave a search mark on your credit report. If you make too many searches, it can reflect badly on your credit score and lead to rejection. You can use eligibility checkers such as Capital One’s QuickCheck to see if you are likely to be accepted before you apply. These eligibility checkers use soft search, meaning there’s no impact on your credit file.
