How to improve your credit score in 2021

With the new year only a few weeks away, many people will be starting to look towards 2021 and making positive financial steps. One simple way consumers can boost finances next year is improving their credit score, as having a good credit score will help to improve the chances of being accepted for a wide range of financial products, from credit cards to a mortgage.

Before looking to improve a credit score, consumers should first know their current credit score. Checking a credit score can easily be done online and some credit check providers offer this service for free, such as:

• Totally Money, which allows consumers to get a live credit score and report for free. Its service also offers personalised advice about how to improve their score and why it changes, a Unique Borrowing Power score to help users understand their likelihood of being accepted for credit, and the ability to check their eligibility for cards and loans.
• Check My File, which offers a free 30-day trial and then charges £14.99 a month that can be cancelled at any time. It offers a multi-agency credit report that allows users to see data from all four UK Credit Reference Agencies, as well as offering a free Identity Fraud Assistance for victims of fraud and freephone customer support with a trained Credit Analyst.
• Experian enables consumers to get an Experian Credit Score for free that allows them to see their eligibility rating for credit cards and personal loans. In addition to this, its service allows users to discover credit deals from leading lenders.

Other credit check providers allow consumers to check their score for a fee, including:

• UK Credit Rating, which charges £19.95 per month but allows a 14-day free trial. Its service provides an instant credit report and score, unlimited access to the credit report and score, a freephone customer service team to assist with any questions or queries, and an online dispute function.
• UK Student Credit Checker also charges £19.95 per month and allows a 14-day free trial. Its service allows 24/7 access to the credit report and allows consumers to dispute any incorrect item directly on the credit report in the online account, as well as access to a social media score and report to see how their social media profile looks to others.
• Equifax charges £7.95 per month and a free 30-day trial is available. It provides both single agency and multi-agency credit report monitoring, unlimited online access to the credit report, and expert tips to help users understand their credit report.

Compare credit check services and find out more about the different services and how they work in our full guide.

Consumers who have recently split from a long-term partner, or who have moved out of a house share, in which they held joint bank accounts can improve their credit score by disassociating their finances from their ex-partner or housemates. This is especially important if the ex-partner or housemates were not good at managing their finances and had a large number of debts and missed repayments, as this can negatively impact the credit scores of everyone who is financially associated with the person.

The most common reason to have a poor credit score is having been in financial difficulty, where repayments on debts have been missed or the person has defaulted on their debts. The length of time it takes to improve credit scores for those in this situation depends on the level of financial difficulty the person is in, with those being declared bankrupt usually taking the longest period of time – six years or more – to see their credit score recover.

Those in this situation can improve their credit score by paying off debts as quickly as possible and those with credit cards should try to pay more than the minimum amount when making repayments. Those who are struggling with managing debt should get advice as soon as possible by speaking to Citizen Advice or a free debt charity.

Consumers who have no debt and want to improve a poor credit score should consider products such as LOQBOX, which allows its customers to grow their credit score while saving at the same time. Another option to consumers is using a credit repair card. These credit cards work in the same way as standard credit cards but often have much lower credit limits and are aimed at those with poor credit scores. It should be noted that these cards normally charge a higher than average APR, so borrowers should aim to repay the full amount each month before interest is charged.

Although never borrowing money may seem like a good way to get a good credit score, in fact those who have never taken out credit often have a low credit score. This is because lenders want to make sure that they are lending to someone who has experience in managing and repaying debt. For those without a credit history, taking out credit is the easiest way of improving a credit score, which can be as simple as taking out a credit card and making sure the balance is repaid in full each month.

There are also, often overlooked, ways of improving a credit score. These include being on the electoral roll at the correct address, closing unused credit accounts such as store cards and keeping credit card balances as low as possible.

More information on improving your credit score can be found in our guide, how to improve your credit score.