Let’s talk about how to build your credit score fast in the UK.
A good credit score is an indicator that you are trustworthy with a loan. It signals that you are good at paying back your debt on time, in full, and aren’t likely to default on payments.
The UK has three credit reference agencies (Experian, Equifax and TransUnion) that score you. They build your credit reports using information about you, your UK bank accounts and payment history. Each uses roughly the same formula, meaning they are all looking for the same signals that you are worthy of credit.
So, how do you boost your credit score overnight, signalling to these agencies that you are in fact trustworthy?
There are a few things right off the top that can improve your credit score quickly:
1. Check that you are on the electoral register at a permanent residence.
If not, register as soon as possible. Otherwise credit agencies have a hard time placing you and your score suffers. You can do this by registering to vote online.
2. Pay it down your balance now.
The amount you owe is a huge indicator to these agencies. Make outstanding debt as low as possible compared to the credit you are allowed (your debt to credit ratio). Less than a 30% debt to credit ratio is ideal. If you can’t pay it down at once, call up your creditor and see if you can negotiate a settlement.
3. Pay bills now, even if they are not yet due.
Multiple payments a month are usually allowed and this has the benefit of reducing your balance when creditors come looking.
4. Ask to increase your credit limit.
If approved, your balance to credit ratio (how much money you spent versus how much you are allowed) will be lower, which is looked upon favourably. You can use Money Dashboard to track your card spending so you know when you reach your ideal spending limit.
5. Become an authorised user.
The people you share accounts with impact your credit score. If you can find someone with very good credit, and is okay with this huge favour, ask him or her to add you to one of their accounts. When the account shows up on your credit report, the association gives you a boost. Be sure to promise that you won’t use the credit card, just that you’re using it to build credit.
How to build your credit score in a few months
If you want to know how to raise your credit score in one month, or how to raise your credit score in 3 months, do all of the above, or as much as you can. And add in these steps for extra impact:
1. Apply for a credit card and use it right away.
Many banks offer cards designed to help build credit. After a few months of paying off debt (ideally six) you’ll have evidence of a responsible payment history.
2. Put your name on the bills.
Open a bank account if you don’t already have one and link all of your bills to it assuming you are paying them off in full. The more bills you are paying off each month in full the better.
If you live with someone who directly pays the shared electricity bill, for example, ask to switch the account to your name. That way credit agencies will start to see an ongoing, strong payment streak.
How to raise your credit score fast with no credit or bad credit
When you move to the UK your credit scores abroad do not come with you. You’ll be starting from scratch and, if you play it smart, there’s nowhere to go but up.
Similarly, if you’re just breaking into the adult world of finance and have never had your name associated with an account, or simply trying to rebuild from a bad place, get ready to make a good impression.
One of the best things to do is secure a credit card and establish yourself. But be careful, the initial few months with a new card will be one of the most important records future creditors have to look at and judge by. So use it responsibly: make purchases with it but don’t go into overdraft. Pay it off on time and in full, and don’t spend to your limit.
Chances are, if you have no or poor credit history your first card will be a lousy one. It will have a low credit limit and high penalties. But if you follow these steps, before you know it your credit score will 1) exist and 2) be on the rise. And as your score improves, options for better credit cards and financial perks (like mortgages and rental options), even jobs, will open up too.