How to Improve Your Credit Score in the UK - 3 Month Action Plan
Improving your credit score can give you a financial advantage in countless areas of your life. For example, a good score can make it easier to get a mobile phone contract, rent a flat, get a car loan, or even eventually purchase a home.
However, there’s no guaranteed way to improve your credit score without maintaining good financial behaviour. In this article, we’ll look at tangible steps you can take in the first three months of your credit building journey and beyond.
How Long Does it Take to Improve Your Credit Score?
Building credit takes time, but your existing credit file will play a role in how much time it takes.
For example, if you’re new to building credit, actions as simple as paying a credit-builder card on time each month could help improve your credit score. However, if you have negative marks on your credit file, like a CCJ or a default, your credit score may be more stubborn, and building credit could take much longer.
Ultimately, how long it takes to improve your credit score will depend on your existing credit file, whether you take on new debt, and how committed you are to the credit-building process.
With that in mind, let’s take a look at what you can do in the first month of your credit-building journey to boost your credit score.
Tips For Improving Your Credit Score in Month One
During the first month of your credit-building journey, focus on the easy wins. These are things that you can do with ease from the comfort of your own home, yet can still work towards improving your credit score.
- Sign up for Pave: Pave helps build your credit without taking on any risk or debt simply by reporting your positive payment behaviour to all three major credit reference agencies (CRA). By taking this step first, you’ll be building your credit history for as much time as you can.
- Register for the electoral roll: Registering to vote helps prove to lenders that you are who you say you are. This reduces the risk of fraud, making you less risky to lend to, which can increase your credit score.
- Sign up for direct debits for recurring bills: Many recurring bills such as mobile payments or utilities offer the option to enrol in direct debits. Missed payments can have a huge impact on your credit score, so eliminating that possibility is a wise thing to do. However, make sure that you’re budgeting appropriately to avoid dipping into your overdraft.
- Check your credit report: Get a free copy of your credit report from the 3 main UK credit reference agencies: Experian, TransUnion and Equifax. Checking your credit report itself won’t help increase your credit score, but it can provide you with a good roadmap of areas to focus on and improve as you move forward in your credit building journey.
- Reduce your credit utilisation: By paying off your debts and bringing your credit card balances down, you’ll improve your credit utilisation ratio. This ratio is an important indicator to lenders that you can manage credit lines responsibly. Lowering your credit utilisation rate can improve your credit score as soon as the next month lenders report to Credit Reference Agencies.
Related read: Beginner’s Guide to Building Credit the Right Way
Improvements for Month Two
After you’ve assessed your credit report in the first month of your credit-building journey, it’s important to keep moving on your path to better credit:
- Dispute errors on your credit report: Correct any outdated information, ensure all of your current accounts or credit cards are accounted for, and look out for any fraudulent activity. Be sure to reach out to each main credit reference agency if you spot any errors. Remove any financial connections that are outdated, such as shared bills with an ex.
- Consider submitting a notice of correction: This allows you to explain negative marks on your credit file. While a notice of correction won’t actually fix your credit, it can help explain circumstances to lenders as they review your credit after applications for credit cards or loans.
- Plan a budget to ensure you don’t miss payments: Your hard work to improve your credit score will be more impactful if you develop healthy financial habits as well. A budget will help you plan your monthly spending to sustain your credit score’s growth for years to come.
Improvements for Month Three
By month three, you could already be seeing some positive improvements to your credit score. However, that doesn’t mean it’s time to relax; in fact, it’s time to double down on your efforts. Here’s what to do during month three:
- Sign up for the Rental Exchange Initiative: If you rent housing, the Rental Exchange allows your credit score to benefit from rent payments the same way homeowners benefit from mortgage payments.
- Consider using a credit builder tool: Signing up for a credit builder loan, a credit builder card, or a credit building app like Pave can help your credit score improve even further.
- Continue following your budget: closely following a budget and making payments on time is central to any plan to improve your credit score. Be sure to make your budget realistic and include a reasonable amount of money for things you enjoy—it'll help you stick with the plan.
Stay Motivated and Keep Going
Building credit can be a slow process. This blog focuses on just the first three months of your credit building journey, but building a good or excellent credit score can take a long time. However, it’s completely worth it; an improved credit score can save you thousands of pounds over time.
If you get frustrated at how slow progress can be, try to focus on the long-term results that will make today’s actions worth it. As time passes, you’ll begin to notice the positive changes picking up momentum.
Pave can help too. By sharing payments with the UK’s credit reference agencies, monitoring your upcoming bills, and giving you personalised credit fixes, the Pave app can help get your credit score moving up. Ready to start your credit-building journey? Download the app from the App Store or Google Play today.