If you want to qualify for a mortgage, credit card or even a phone contract, then it’s important to have a good credit score. If you’ve had trouble in the past, or even if you have never taken credit before, you may have a low score and be unable to qualify for credit.

If you’re in this situation, what can you do? Read on, and we’ll endeavour to give you some answers.

Frequently Thought Questions

If you’re worried about your credit score or, have recently been declined credit, it can be quite stressful. You may also feel a little embarrassed to ask for help. But there’s no need. We’ve designed this guide to answer some of the questions you may have in your head about how to get that credit score up.

What is a credit score?

When you apply for credit, the lender will look at your financial history. They do this to evaluate your spending habits and to see whether you represent a risk of not repaying what you want to borrow. Over the years, your payment history, earnings, available credit and more have been refined into a simple credit score that forms the basis of a lender’s decision.

Why is it important?

Your credit score forms one of the most important factors in determining whether or not you’ll be granted credit. This means that if you need a loan, a mortgage, a phone contract or any other form of lending, your credit score will be checked by the lender. If you have no credit score, or a poor one, you’re much more likely to be declined what it is you need. 

A poor credit score can also prevent you getting the best deals and promotional rates on certain credit cards.

Utility companies may even demand upfront payments for poor credit scores, leading to further inconvenience from a financial perspective.

Where can I check my score? 

You can do this at the three UK credit score companies or reference agencies, Experian, Equifax and Callcredit. It’s important to note that while they do the same thing, they have different ways of calculating your score and different lenders use different credit score companies. That means it might be worth checking at more than one.

My report has mistakes in it, what should I do?

Errors could adversely affect your score and it’s worth getting them removed. You can complain directly to the credit reference agency. They’ll then have up to 28 days to remove the information or tell you why they think you’re wrong. Once you challenge the information, lenders aren’t allowed to rely on it when assessing your credit rating until the issue is resolved.

Why have I got a low credit score? 

There are a number of reasons why your credit score might have been adversely affected:

You’re new to credit

It may seem unfair, but if you’ve never applied for credit before, you have to build a score rather than being assumed to be a good risk. So, if you’re leaving school or college, you’ll need to follow steps to get yourself a better score.

A poor credit history

The lender may consult the public records, so if you have been made bankrupt, have County Court Judgements (CCJs) or other serious financial mishaps, they will lower your score and it will be harder to obtain credit.

Multiple applications

The lender will also look at your account history and recent credit applications. If you have opened a number of different accounts, or simply applied for various different products, this will all have a negative impact on your credit score.

If you have a solid income and service all of your accounts, this may not be the case, but it’s generally considered bad for your score to make a series of applications in a short timeframe as it looks like you might be struggling to get credit, which could raise a warning flag with any potential lender.

Remember, making an application and not following through with the credit offer will stay on your file and may affect your credit score.

Can being refused credit affect your credit score?

If you are refused credit then it will not show up on your credit report. Whilst not directly having a negative impact, the fact that you made an application will show up as a footprint. Therefore it’s a bad idea to apply to a huge number of places at once – lenders can see these footprints and may become concerned that you’ve financial difficulties or could even be committing fraud.

It’s important that if you are refused credit, you find out why before making another application to avoid being turned down soon after for a second time and making the situation worse.

I was thinking of applying for credit but I’m concerned about my score – should I just apply anyway?

Whatever form of credit you’re thinking of applying for, it’s a good idea to check your credit score first. If your scores aren’t great, it may be worth trying to build up your score rather than applying and being rejected. 

Get on the electoral register

If your name isn’t on the electoral register, it will adversely affect your credit score so make sure you are registered! 

Cancel any unused cards

If you’ve cards that you’re no longer using or rarely use, cancel them. Having a card and not using it doesn’t help your score as it means you already have access to credit so another new lender may not feel comfortable offering to lend you money as well.

Use a credit building pre-paid card

Some prepaid cards have a credit-building option that helps improve your credit score. You’ll be ‘loaned’ an amount, which is loaded on to your prepaid card by the company. You sign a credit agreement and agree to pay the card company a monthly fee to repay your ‘loan’.

At the end of the year, providing you haven’t missed any payments, this will be recorded on your credit report as 12 months of successful repayments – that’s good news for your credit score.

Get a credit building credit card 

It might seem strange that using a credit card can help build your credit score but remember, it’s the act of repaying your debts on time that is the secret of building your score. While you won’t be able to access cards with the lowest interest rates, if you repay the whole balance on time this won’t matter – and you’ll be boosting your score along the way.

Avoid short cuts

You may see adverts by companies who claim they can rebuild your credit rating for you– they can’t. The only person who can do that is you by following the actions above.

Compare credit building credit cards

Why not look into a credit building credit card now? We’ve built a credit card comparison service that will allow you to compare cards and it’s really simple, plus it won’t cost you anything. Follow the link here to try it. 

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