How to improve your credit score

Whether you're trying to get a mortgage, loan or credit card, a good credit score could increase your chances of being accepted. It can have a big impact on your day-to-day finances, even affecting whether you’re accepted for finance on a car or mobile phone contract.

A good credit score also helps you to manage your debts, as it can provide you with access to lower interest rates that reduce your total repayments. As an ethical bank, The Co-operative Bank is here to support you and to help you stay on top of your finances.

What is a credit score?

What does a credit report include?

How can I check my credit score?

How to fix a mistake on my credit report?

What is a good credit score?

Will I be able to borrow money if I have a good credit score?

When should I check my credit report?

Who can access my credit report?

What can harm my credit score?

How can I improve my credit score?

How long does it take for my credit score to improve?

How we can help?

What is a credit score?

A credit score is calculated based on information on your credit report and shows lenders how likely you are to be accepted for credit. There is no universal credit score as all lenders will use their own criteria based on information held on your credit file. A higher score means you are seen as lower risk. This helps to determine if your application for a mortgage, loan or other form of credit is approved, and sometimes the interest rate you are offered.

What does a credit report include?

A credit report is a historical record of how and when you pay your bills. Your credit report includes information such as your current borrowing, your current credit limits and whether you make payments on time.

How can I check my credit score?

You can check your credit report by searching credit reference agencies (CRA) online. You can usually obtain a copy of your report and your indicative credit score by entering your details on the website of your chosen CRA. The most well-known CRAs are Experian, Equifax and TransUnion. A credit report is free but some CRAs may charge a subscription fee after the first month.

It’s good practice to check all details held on your report are accurate. If you find any details that may not be correct, don’t worry, these can be corrected.

How to fix a mistake on my credit report?

It’s recommended to first contact the company who the mistake is associated with. If the company agrees with the mistake then they should remove it and inform the CRA. If the company disagrees with the mistake, then you can raise a dispute with the CRA who will investigate.

You should also check your credit reports with other CRAs to make sure that they are accurate and don’t include the same mistake.

What is a good credit score?

Each CRA has their own credit score rating scale and the number will differ dependent on which CRA you are using. If you are classed as having a ‘good’ credit rating with one CRA, you’re also likely to be rated ‘good’ with another CRA because they will all be using your financial history to determine the score.

Here are the scores for a ‘good’ credit rating across the UK’s three largest CRAs:

Experian: 881 - 960

Equifax: 420 - 465

TransUnion (formally Callcredit): 604 – 627

Will I be able to borrow money if I have a good credit score?

Lenders must ensure they fully consider information about you to make sure that any lending is affordable and that you can repay it. They will use a variety of information to give you a credit score which helps them determine whether or not they will lend to you.

This will include information on your credit file because it gives an indication of whether you've been able to manage lending repayments in the past or whether there are any signs of difficulty in doing this. It will also help inform what level of lending they can provide to you and on what terms if you are accepted. The lender may also use information they already know about you based on previous accounts you have had with them or applied for.

If you have a lower credit score, you may still be able to borrow money but it may limit the amount of credit the lender can provide to you and the interest rate applicable.

When should I check my credit report?

You can check your credit report as often as you like and it will not impact your credit score. However, you don’t need to check your report every day. Some prefer just checking annually, whereas others prefer checking monthly or even weekly. It’s all down to what makes you the most comfortable.

There are some situations in which you may want to check your score more frequently such as:

• Applying for a mortgage or loan
• Opening a new credit card
• Checking for possible identity theft
• Applying for a new job which involves a credit check

Who can access my credit report?

Any organisation can access your credit report, providing they have a legitimate reason for doing so, such as if you’ve applied for a credit card or loan with them. A company should ask your permission before they access your credit report.

Companies who may look at the data in your credit report include:

• Banks
• Creditors and lenders (such as credit card and car finance companies)
• Mortgage providers
• Potential employers
• Landlords / Letting Agents
• Utility suppliers
• Telecoms providers

This type of action is known as a ‘hard search’ and will appear on your credit report. A hard search is also visible to other lenders and may impact on your credit score and future credit applications. Most hard searches stay on your credit report for 12 months.

What can harm my credit score?

There are several factors which can affect your credit score, these include:

• A history of late or missed payments
• Going over your credit limit
• Defaulting on credit agreements
• Bankruptcies, insolvencies and County Court Judgements (CCJs) on your credit history
• Making too many credit applications in a short space of time
• Joint accounts with someone with a bad credit record
• Frequently withdrawing cash from your credit card
• Errors or fraudulent activity on your credit report that’s not been detected
• Not being on the electoral roll
• Moving house too often

How can I improve my credit score?

There are many things you can do to help improve your credit score:

Make sure you pay bills on time

One of the best ways to maintain a strong credit profile is to stick to your commitments and make payments on time, whether that’s on your mortgage, credit card or utility bills. If you’re struggling to meet repayments or facing financial difficulties, read this guide on how to get your finances organised and seek support.

Register on the electoral roll

Registering to vote in your local area will establish your identity to lenders, as well as demonstrating that you have a stable, fixed address. It only takes minutes to register via the website of your local authority and may help to quickly boost your credit score.

Keep applications to a minimum

If you have been declined for credit, do not re-apply straight away. Instead, check your credit report file to see if something is there that shouldn’t be.

Consider any past or current financial links to a partner

If your partner has a poor credit history, this may be linked to you through utility bills, bank accounts or your mortgage. To avoid this, try to separate your credit accounts and bills.

Consider the financial impacts of delaying or missing payments

Taking a payment holiday or any other pre-arranged payment break might affect your credit score, although this doesn't mean it's not the right thing to do if you need it. For example, the coronavirus crisis led to many people obtaining much needed support through payment holidays.

It is advisable to talk to your creditor or lender as soon as you begin to struggle with your finances so that you can work out a new payment plan. They can also advise on whether delaying/missing payments will impact your credit score.

Stay within your credit limit

To credit reference agencies and lenders, going over your credit limit can affect your credit score and it can put your account into default which can cost you more in charges and interest. If your account goes into default this is recorded on your credit report which can affect your credit score.

Avoid taking cash out on your credit card

Withdrawing cash on your credit card is recorded on your credit report and whilst this may not be a bad thing by itself, it may look like you’re struggling financially to lenders if you’re making multiple withdrawals.

You may also pay higher interest on credit card cash withdrawals, so check this out too so you understand the costs involved.

Make more than the minimum payment each month

The monthly payments you make don’t appear on your credit report, however the amount you’re paying off on your accounts will affect your credit utilisation. Only paying the minimum amount each month may keep your credit utilisation higher as it will take longer to clear the balance and it will cost you more to repay the balance in full, especially if you’re still continuing to spend on the credit card. A lower credit utilisation can have a more positive effect on your credit score.

Spend on your credit card every now and then

If you use your credit card enough and make the repayments on time, this shows lenders you’re able to make repayments promptly which can help to boost your credit score. This can make you more attractive for future lending. However, it’s important to only spend on your credit card if you can manage the repayments, as missing credit card payments can have a negative impact on your credit score.

Pay any outstanding CCJs and defaults

County Court Judgements (CCJs) and defaults can seriously affect your credit score and they can stay on your credit report for up to six years. However, if you make the repayments it’ll be marked as ‘satisfied’ on your credit report which looks better to lenders. You can also consider adding a note to your credit report explaining why you defaulted (such as redundancy or illness) if this is the case. As the default ages, it becomes less important to lenders, so you may still be able to get credit with a CCJ or default after a few years.

You can find out more about CCJs on the StepChange website.

How long does it take for my credit score to improve?

It is possible to improve your credit score by a few points within a few weeks, but this is not guaranteed. To have significant credit improvement it can normally take anywhere from a few months to a few years. Improving your day-to-day money management, such as making use of free online budget tools and growing your savings, is one of the best ways to take control of your finances over the long-term.

How we can help?

Our basic bank account Cashminder is a current account for those with no or a low credit rating. The account is easy to open online and provides a simple way to manage your money anytime, anywhere via online banking or using our mobile app.

Acceptance for a Cashminder account is subject to eligibility and an assessment of your personal circumstances, but you won’t be declined due to no or a low credit score, and we won't leave a footprint on your credit file when you apply.

You can also find out more information on opening a bank account with a poor credit history with our useful guide.

Contact us

Asking for help with your finances is never easy, but it’s the first step in the right direction. If you’re a customer of The Co-operative Bank or smile and are worried about your finances, remember that our customer support team are on hand to listen and provide one-to-one support if you need it.

As an ethical bank, we also work with a number of charities and organisations that can provide further support to those experiencing financial difficulties and other challenging times. You can read more about our financial support partners and other helpful services on our Money Management Hub.

For any other queries and access to more resources, you can also visit our dedicated financial support page.