Improving your credit score

Want to be able to borrow more money? Wondering if you will ever be able to get on the property ladder? First things first let’s build that score.

Let’s start with the basics, what is a credit score? It’s the number that indicates to lenders how likely you are to pay back a loan based on your borrowing history. The easiest way to increase it? Show to lenders you can be trusted with money!

Depending on your past borrowing history that might mean different things.

Get and use your overdraft: If you have never borrowed money before and overdraft is a great place to start. You can apply for one through most banks and get approved quickly. The trick with an overdraft is stay within the goldilocks zone of borrowing i.e the credit utilisation. Aim for a Credit Utilisation of around 30%, so if you have an over draft of £1000 you would be aiming to use £300 every month. This shows lenders you are not maxing out the loan every month. Also follow the golden rule of paying it off in full every month using a direct debit so you don’t forget.

Get and use your credit card: Credit cards get a bad rep but when used correctly and responsibly they are magical for increasing your credit score (and can give you some freebies along the way depending on the type you have.) Even if you just use yours for fuel or food, showing lenders you can be trusted with credit will increase your credit score in no time! Again two golden rules apply, stay within your credit limit and pay off in full every month using a direct debit.