How can I improve my credit rating?

Approved by the Car Finance Advisory Board

So, you’ve built a good, strong credit file, making timely repayments and with all your information correct on your credit report. It’s just smooth sailing from here, surely? Unfortunately, not. There are many ways that your credit rating can drop if you don’t stay vigilant. Below are the most frequently asked questions about how to maintain and improve your credit rating.

I've always made credit repayments, does that mean I have a Good credit rating?

Making regular payments doesn’t necessarily mean that your credit rating will be as high as it could be. If you already have a great credit rating, the temptation will be there to apply for more credit - you’ve got the great score, why waste it? Indeed, a healthy credit score will make it easier to get accepted for credit, but you should be careful. Too many applications in a short space of time can be deemed unattractive to lenders and could bring your credit rating down because you could be deemed credit hungry.

Click here for more information.

What's considered a good length of time to live at an address?

The longer you live at an address, the better it is for your credit rating. If you move from place to place every year, it can be difficult for credit agencies and lenders to keep track of your movements and therefore it can result in a lower credit rating.

When you apply for credit, you would usually be asked for 3 years' worth of address history, so if you move more than once in this period you need to keep track of what agreements were made at which address.

Although lenders would usually like you to stay in the same place for years, this is not always realistic. The most important thing in getting a great credit rating is that you ensure your traceability. What this means is that wherever you go, make sure that you inform the credit reference agencies of your move, as well as any creditors you have agreements with. Finally, if you make sure you’re on the Electoral Roll, you’ll ensure that even if you do move, your credit rating won’t be too negatively impacted.

How important is it to be on the Electoral Roll to get car finance?

Being on the Electoral Roll is incredibly important and is now a legal requirement; if you’re not registered you could be fined up to £1,000. The longer you live at an address, the better it is for your credit rating. If you move from place to place every year, it can be difficult for credit agencies and lenders to keep track of your movements and therefore it can result in a lower credit rating.

You can find out more about why being on the Electoral Roll is so important for you and your credit rating.

I already have credit at my address - is that a good thing?

To see that you’ve already been accepted for credit at your address is a great indicator that you are suitable for credit. If one lender has deemed you acceptable to lend to, chances are others will too.

To find out more about why being approved for credit at your current address is a good thing. Click here!

I have a great credit score; why was I refused credit?

It’s great that you have a Good credit score, however this should always be taken with a pinch of salt as it won’t guarantee you credit. The credit rating given to you by agencies such as Experian and Equifax are only seen by you when you use their services, and offer a simple visual of your current credit worthiness.

Each lender will have their own criteria as to who will make their ideal customer to get credit, and unfortunately it could very well be that the particular lender you applied to could have seen something in your credit file they didn’t like. For example, this could be if you already have access to plenty of credit. They could have also picked out something in your application form, such as your salary, and judged the refusal based on whether you can realistically make your repayments. There is a wealth of other factors that could contribute to being refused credit. For more information, please look at our Do I Qualify? section.

More tips on improving your credit score

If you're still uncertain on what's causing your credit rating to be so low, you can visit our Credit Clinic. In this section of our website, we explain more about each individual credit rating, what causes can negatively affect your credit rating, what steps you can take to improve your credit score, and links to impartial unbiased resources that can help you manage your finances. Visit the Credit Clinic for more details.

Approved by the Car Finance Advisory Board

Published: 16/05/2016
Last Updated:27/11/2018
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