5 ways to increase your credit score

The elusive credit score. Most of us 
understand that it’s a good thing to   have a good one. But does anyone actually 
know what impacts it and by how much?
  To make your credit score feel less abstract, 
in this video I’ll not only take you through 5   of the main factors that affect your credit 
score, but I’ll be putting each one through   our snazzy Finder Credit Score Scale of 
Scales to see by how much each factor   actually affects your credit score.
According to Experian, the average credit   score in the UK is 797. So, for every scenario we 
put through the scale of scales, I’ll start off   with that score to demonstrate any changes.
If you end up watching this video and thinking,   yikes, my credit score is looking a little worse 
for wear – fear not! For each factor I cover,   I’ve also included some helpful 
tips to keep your score up or,   potentially, give it a little boost.

Credit Score Scale of Scales powered by   data from Experian. Experian’s credit score 
ranges from 0 to 999 on a scale of “very poor”   to “excellent”. Credit score bands will differ 
depending on the credit reference agency.
  One late or missed payment on your credit 
report might not feel like a huge deal,   but even 1 could cause your credit score 
to drop. And a history of late or missed   payments could even lead to your credit provider 
upping your annual percentage rate, or being   rejected for future credit applications.
If we run this scenario through our Scale of   Scales you can see that paying a bill late 
could cause your score to drop by as much as   130 points. That’s enough to potentially knock 
you down from a Fair to Poor credit score,   depending on where your score is at.
So, solutions! If you miss a payment there   are a couple of things you can do to potentially 
stop your score from dropping.

If you’re only a   few days late, contact your credit card provider 
as soon as possible as you may be able to sort   out the payment before it gets officially reported 
to credit reference agencies. In our Finder credit   score dashboard, the “your insights” carousel will 
give you an at a glance look at your score and   report, with the option to dive deeper into any 
factors keeping you from staying on track.
  Your credit utilisation ratio, or CUR, is the 
ratio of credit you are using against what the   bank is willing to lend you. For example, if I 
have a credit limit of £1,000 and I spend £500   of it, my credit utilisation ratio would 
be 50%.

A good credit utilisation ratio is   generally considered to be around 30%.
So, even if the bank is willing to give you   a massive credit limit, that number is not 
a challenge, and actually having a CUR over   90% can cause your credit score to drop by 50 
points. Whereas keeping your CUR under 30% could   potentially boost your score by 90 points.
One hack to potentially boost your credit   utilisation ratio is to avoid closing 
credit accounts.

If, for example,   you’ve cleared a credit balance and no longer 
use the card, keeping that account open in the   background keeps that credit limit on your file 
which could help keep your credit utilisation   ratio lower. You can also monitor your CUR 
in your Finder credit score insights.
  A common misconception is that being rejected 
for a credit application can harm your credit   score. In reality, it’s not the outcomes 
that are recorded in your credit report,   but the number of applications that require 
a hard credit check. So even if you apply   for 10 cards and get accepted for all 
of them, that could reflect negatively   on your credit report as it could be a 
sign to credit reference agencies that   you’re seriously in need of credit.
If we run this through the Scale of Scales,   you can see that having an account on your file 
less than 6 months old could cause a drop of 40,   whereas having no new accounts opened in the 
last 6 months could boost your score by 50.
  To avoid unnecessary score fluctuations, use an 
eligibility checker to see what credit products   you’re likely to be accepted for beforehand.

If 
you do get rejected, stop and take a moment to   review your credit report and figure out why. In 
Finder’s credit score dashboard, you’ll not only   get a free credit score and access to your full 
report, but you’ll also get suggestions to improve   your credit score including a tailored to-do 
list to keep your progress ticking along.
  Being on the electoral roll gives lenders 
proof that you are who you say you are   when you apply for a form of credit. And it’s a 
super simple way to boost your credit score by,   potentially, around 50 points.
Your Finder credit insights will flag   where you can improve your credit score, 
including updating personal information like   adding current and previous addresses where you’ve 
been registered for the electoral roll at.
  Major red flags should be avoided in all 
areas of your life, but especially for   your credit score.

These can include things 
like country court judgements for unpaid debt   or a default account where an account has 
been shut down due to missed payments.
  These can have a serious impact on your score. 
CCJs could result in a drop of around 250 points   and a default account as much as 350.
Debt can be a stressful subject, if you’re   struggling or want to know more, check out 
this video on the different levels of debt   and how to manage it or click this link to 
check out our info guide on debt.

  For more information on what factors 
affect your credit score and by how much,   check out our research into the hidden costs 
of missed credit card payments here.
  To start your credit score journey with Finder, 
including all those juicy insights and support   I mentioned, check out first link in the 
description under extra resources.
  If you found this video helpful, like, 
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Until next time, thanks for watching..

As found on YouTube

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