Lots of people want to improve their credit score, but it isn’t always easy to know where to start. From easier access to finance through to lower interest rates and preferential loan terms, it makes great financial sense to get your score up. Fortunately, there are plenty of tried and tested methods that could help you to improve your financial outlook.

The top credit score factors

Contrary to popular belief, credit scores are not calculated by using some hugely complex algorithm. In actual fact, five primary factors are used to calculate where your score falls – which will usually be somewhere between 300 and 850. The primary factors are:

Payment history – a record of whether you’ve paid back your debts on time.
Credit history length – showing how long you’ve held your credit accounts. Generally speaking, the longer, the better!
Total amount owed – as reflected by your credit utilisation ratio, which shows lenders how reliant you are on credit at any given time.
Credit mix – reflecting the types of credit you owe from car loans and mortgages to credit cards.
New credit – indicating the number of new credit accounts you’ve opened recently. Too many applications over a short space of time could damage your score.

Once it’s been calculated, your score is then used by lenders to work out how likely you are to pay back what you owe – helping them to decide whether they can lend to you, and on what terms.

1. Always pay your bills on time

The first and most practical step you can take to improve your credit score is to pay off what you owe on time. Late payments are known to be the single most significant factor affecting credit score, and late payments can linger on your credit report for years.

If you are unable to pay what you owe on time, reach out directly to your creditors and work with them. Doing this shows that you are engaged with the issue and keen to deal with it – and in some cases may even limit the damage to your credit score from a late payment.

2. Seek out a higher credit limit

As mentioned above, the total amount you owe is a major factor in determining your credit score. Rather than reflecting the total amount you owe, however, the figure primarily focuses on how much you owe relative to your total credit limit.

Some financial experts suggest that you should never exceed 10% – 30% credit utilisation at any one time. As a result, it makes more sense to increase your limits or find a new source of credit rather than to simply max out your existing accounts.

3. Keep credit cards open

In a similar way, you can take a relatively passive approach to improving your credit score by simply keeping your credit card accounts open. The longer they’re open, the more extensive your credit history will be – giving lenders greater confidence that you’re a reliable borrower.

4. Use personal loans strategically

If you don’t like the idea of taking out another credit card, a short-term personal loan could help to improve your credit score without the need to enter into a much longer commitment.

Some online credit brokers such as Little Loans even offer a free online eligibility checker – so you can find out if you qualify for a personal loan without impacting on your credit score. Keep in mind that each full credit check leaves its mark on your credit report and could affect your ranking – so these kinds of tools can be incredibly helpful.

5. Get onto the electoral roll

Being on the electoral roll (also known as the electoral register) can help to improve your credit score – and it’s actually one of the simplest ways to do so. By adding your name to the UK’s electoral register, you’ll be making it easier for credit reference agencies to verify your identity. This can help you to appear as a stable potential borrower, upping your score and your estimation in the eyes of creditors.

Keep at it

The most important thing to remember when trying to improve your credit score is reliability. The more reliable you are, the less concerned creditors will be that you won’t pay. Being patient, consistent, and sensible with your borrowing can go a very long way indeed.