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Updated: 3rd September, 2019

Get the credit score you need for a new car

Most of us have been in a position where we have being declined credit and it’s not the greatest feeling to be told that ‘you’re not good enough’. While the inconvenience and embarrassment isn’t enough, you just don’t know how to get your credit score up!

Improving your credit score is really important. Your credit is a factor taken into account by a lot of finance companies when deciding to lend you money. It’s not just a poor score that will impact you either, if you have never taken credit out then you will also find that lenders can view you as a risk and you may struggle to get credit when you need it.

If you are looking for the best tips to increasing your credit score then you’ve come to the perfect place.

 Get on the electoral roll.

It’s not the most obvious of tips but it is effective with improving your chances of being accepted for credit. Most prospective lenders use the information from the electoral roll to check that you are who you say you are. If a lender can’t find you you may actually find yourself being declined for credit.

Close any unused or unwanted credit cards, store cards or mobile contracts

Lenders may consider the amount of credit you have access too as well as the amount of debt. Get rid of the ones you don’t use or want anymore. Don’t just cut your cards in half, this will only make them unusable; you need to close the account by contacting the provider.

Repair your credit with a prepaid card.

These cards are really a really good way to build up your credit score. You pay a small monthly fee of about £5, which you’ll pay for the following 12 months. At the end of the year an entry to your credit file will say that you have successfully repaid a debt. Think twice before you do this though, using the other tips will allow you to rebuild your score without needing to pay £5 a month.

Don’t apply for multiple credit.

This is difficult as we often feel shopping around is good and are tempted to apply lots of places to increase our chances of getting a better rate, but this often backfires. Too many applications, especially in a short space of time can have a negative effect on your future credit score. Let’s say you’ve been rejected or the rate you have been offered is poor, you keep applying for more credit elsewhere to see if the deal you get is better. If you do this, your chances will become more slim. Try refrain from applying to multiple credit companies around the same time.

Use a Soft Search

If you’re just trying to get a specific quote for a loan it’s always good for the lender to do a ‘soft search’ which is what we do here at UK Car Finance. This means that while an enquiry will appear on your file, only you can see it. ‘Soft search’ means that it will not have an impact on your credit score. Lenders are more commingly adopting this practise, but you should still check before applying.

Pay everything in full & on time

One of the most important things you can do to build up your credit score is to pay everything in full and on time every month. Your credit file is essentially a report telling prospective lenders how good you are at taking on credit, so the best thing you can do is prove that by paying on time. Another benefit to this is when you pay in full you can often avoid paying interest on your credit.

Use as little of your limit as possible

Often referred to as keeping your credit utilisation low, your credit utilisation is the percentage that you use of your total credit limit. If you can you keep the amount of credit you use to under 25% of your limit you could see your score grow.

Financially delink to your ex

If you have taken out credit in a joint application with an ex partner then you are financially linked. To do this you need to close all joint accounts then write to the credit reference agencies and ask for a notice of disassociraion. This will then stop their credit score impacting yours in the future.

Don’t withdraw cash on credit cards

Finance lenderds see withdrawing cash on a credit card as evidence of poor money management. Therefore it’s best to avoid doing this completely. Not only can it harm your credit score, but you will likely pay a lot of interest on doing it.

Use your rent to build your credit

In March 2016 Experian and The Big Issue Group launched the Rental Exchange Initiative which allows you to boost your credit score using your rent. It simply records your rental payments much like mortgage payments onto your Experian credit file making your consistency viewable by lenders.

Time is a healer

If you have been hit by a County Court Judgement or have a series of defaults then you should wait before applying for credit. CCJ’s tend to stay on your file for 6 years, you don’t need to wait this long but it’s typically recommended to wait at least 12 months before applying for any sort of credit again.

Did you know you can actually check what your credit score means for getting car finance with our free car finance eligibility checker?

How quickly will be credit score increase?

It’s not a very quick process unfortantely but well worth doing. Experian advise that it can take upto 3 months for them to receive information on you, so you can expect at least that length of time before everything is reflected on your credit report. Paying off lots of debt and reducing your credit utilisation rate to below 30% are often seen as the quickest ways to see your credit jump up. But we can’t stress enough how consistency is key here. Following these tips for a few months then reverting back to old bad habits won’t help. You have to follow this for the longterm, it is afterall a reflection of your credit using habits.