How to increase your credit score
A good credit score is a key to financial success, but understanding how it increases can be confusing for a lot of people. Your credit score does not remain static - it changes based on your financial habits and activities. In this guide, we will explain the factors that contribute to your credit score growth, practical steps to increase it, and how to maintain a strong credit profile.
Understanding credit score calculations
In the UK, your credit score is calculated by three main credit reference agencies: Experian, Equifax, and TransUnion. Each has its own scoring model:
Experian: Scores range from 0 to 999.
Equifax: Scores range from 0 to 1,000.
TransUnion: Scores range from 0 to 710.
Your credit score is determined by several key factors:
Payment history - consistent, on-time payments boost your score.
Credit utilisation - using a low percentage of your available credit limit helps.
Length of credit history - longer credit history usually leads to a higher score.
Types of credit - a mix of credit accounts (credit cards, loans, mortgages) can be beneficial.
Recent credit applications - fewer hard inquiries within a short period are better for your report.
What sort of actions can increase your credit score?
Your credit score increases when you demonstrate responsible financial behaviour. Here are the main ways you can achieve this:
1. Paying your bills on time
Making timely payments on your credit cards, loans, and other financial obligations is the most critical factor. Setting up automatic payments can help ensure you never miss a due date.
2. Reducing credit card balances
Keeping your credit utilisation low (below 30% of your credit limit) shows that you are managing your credit responsibly. Aim to pay off your balance in full each month, if you can afford it.
3. Maintaining long-standing accounts
The longer your credit accounts are active and in good standing, the better it is for your credit score. Avoid closing old accounts unless absolutely necessary.
4. Avoiding excessive credit applications
Each time you apply for credit, a hard inquiry appears on your credit report. Multiple applications in a short period can lower your score. Only apply for new credit when you truly need it. Note, that with Zable, hard searches are only performed if your credit card application is successful - so you can apply without worrying about your credit score.
5. Regularly monitoring your credit report
Check your credit report regularly for errors or if something doesn’t look right. If you spot any inaccuracies, contact the credit reference agency to have them corrected.
6. Diversifying your credit types
Having a mix of credit accounts (credit cards, personal loans, mortgages) can positively impact your score, as it shows lenders that you can manage different types of credit responsibly.
How long does it take for your credit score to increase?
The time it takes to see an increase in your credit score depends on your financial actions, but here’s a rough timeline you could follow.
Immediate impact - correcting an error on your credit report can have a quick effect.
1-3 months - consistently paying bills on time can start showing results.
6-12 months - reducing your credit utilisation ratio can significantly boost your score.
1-2 years - maintaining long-standing accounts and avoiding hard inquiries show gradual improvement.
Overall, your credit score can increase over time through responsible financial habits, such as paying bills on time, reducing debts, and avoiding unnecessary credit applications. Regularly monitoring your credit report and understanding how your score is calculated can help you maintain a good credit profile.
This blog is for informational purposes only and does not constitute financial advice. Please speak to a qualified financial adviser before making financial decisions.