How to improve your credit score – entire books have been written about this. If you, too are affected by a bad credit score, it might be a good idea to pick one of them up.

Or, you could simply read this concise guide to improving your credit score. Which will save you a lot of time and money.

The good thing, after all, is that a bad rating isn’t forever. By following a few simple rules, you can get back on track again surprisingly fast.

What is a credit score?

Before you can improve your credit score, you first need to know what it is, exactly.

Simply put, a credit score is a measure of your creditworthiness. It expresses how reliably you’ve made your loan payments in the past and sheds light on your current financial capacities.

The credit score is a simple number, without the detailed information provided in your credit history. It allows potential lenders to (very roughly) assess the risk associated with extending you credit.

The better your credit score, the higher your chances of getting credit. With a bad credit rating, on the other hand, you may not be able to get credit at all.

Before you can improve your credit score, you first need to know what it is, exactly.

Simply put, a credit score is a measure of your creditworthiness. It expresses how reliably you’ve made your loan payments in the past and sheds light on your current financial capacities.

The credit score is a simple number, without the detailed information provided in your credit history. It allows potential lenders to (very roughly) assess the risk associated with extending you credit.

The better your credit score, the higher your chances of getting credit. With a bad credit rating, on the other hand, you may not be able to get credit at all.

Who determines my credit score?

If you’re looking to improve your credit score, the first thing you need to ask yourself is: Who’s actually behind these credit scores in the first place?

In the UK, we have three major credit rating agencies (sometimes also called credit reference agencies):

  • Experian
  • Equifax
  • TransUnion

Although all three should theoretically hold the same information on you, their scores can vary considerably. So, if you want to truly improve your score, you’ll need to consider all three.

How do I get a credit score?


As soon as you start buying things on credit, you start building (or ruining) your credit score. This is true regardless of whether you’re financing a car or buying fish and chips using a debit card.

All financial institutions – with the solo exception, perhaps, of payday loan providers – send information about your payments to the three big credit reference agencies.

If you’re always making your payments on time, this goes towards a stronger credit score. If you miss payments, make them too late or default on a loan altogether, your credit score suffers accordingly.

The purpose behind a credit score

Credit scores can be a nuisance. But they are actually quite useful. Without them, it would be very hard to get any kind of money on finance, because lenders would be weary of extending a loan to someone they don’t know.

This is also why there is actually something worse than having a bad credit score: Having no credit score at all. Without any kind of information about your previous payment behaviour, lenders would be left in the dark. Many of them would either charge outrageous interest rates or withdraw from lending altogether.

What factors into a credit score?

Every credit reference agency has its own system of calculating a credit score. This ‘recipe’ is obviously top secret. We do know, however, pretty precisely, what factors into it:

  • Payment reliability
  • Results from previous loan applications
  • Total amount of debt
  • Stable life situation

The better your score on these individual items, the higher your overall credit score, and the better your chances of securing finance with a bank or other financial institution.

What is a bad credit score?


Depending on which agency you’re looking at, a bad credit rating will look like this:

  • Equifax: Anything below 580 is considered ‘poor’ or ‘very poor’.
  • With Experian, the poor band starts at 720, so anything below that is considered a bad credit score.
  • Transunion uses a bit of a different system. To get at least a C rating, you’ll need 658 points.

If you want to meaningfully improve your credit rating, you will need to achieve one thing: getting from the poor part of the spectrum into at least the fair part.

So how does this work?

To improve your credit score, you need to demonstrate to the credit reference agencies that you’re a solid partner capable of handling your finances and paying back your obligations in full and in time.

Here are the most promising recommendations, as provided by experts and the agencies themselves:

Check your credit file.

Do this regularly and with all of the major agencies. The point behind this is twofold: Firstly, it allows you to spot mistakes which may reduce your chances of success. Secondly, if you can see that you have a poor or very poor credit score, you may want to wait before applying for a loan until your score has improved.

Get on the electoral roll.

Why should this somewhat bizarre point be on your to do list? Because it allows lenders to verify your personal data. Is also shows them how often you’ve moved. The rationale: The longer you live at the same address, the more this signals stability and is thus considered a benefit.

Close unused accounts and cards.

From the perspective of a lender, multiple debit- and credit cards serve one point mainly: To allow you to get through rough patches when your finances are weak. On the flipside, they also make it a lot harder for you to keep track of your finances. Our advice is therefore to close all the credit cards and debit cards you don’t use and to consolidate your finances on or two accounts.

Don’t apply for too many loans.

It is perfectly reasonable to apply for a few loans and get rejected within a short period of time. If you keep applying in vain for finance, however, this means your finances are not getting any better.

Make payments on time and in full and pay off your debt.

This is the most obvious possibility to improve your credit score. It is also the hardest to put into practise. Let’s therefore now look at ways of making this work.

Credit building card


Having too many cards is an issue. But so is not having one at all. Because payments through a credit or debit card are tracked transparently, they are extremely useful to lenders.

If your credit score is low, you may unfortunately find it hard to get access to a card. This is why some banks issue cards aimed specifically at those with a sub par rating. They are called credit building cards.

These cards have a fairly high interest rate. But they can be used by almost anyone and almost anywhere. If you make regular payments through such a credit building card and pay everything back in full and on time, this can yield excellent results. It might even be the perfect first step towards repairing your rating.

Credit utilisation

This is perhaps the most often forgotten point when it comes to improving your credit score. Credit utilisation is a gauge of how much of your possible credit you are actually working with.

Let’s say your debit account allows you to be 1,000 in the red. Let’s further assume you’re using it completely. Even if you pay back all of this punctually and without fail, lenders will still regard this with suspicion.

To them, exhausting all of your financial reserves is a sign of underlying financial problems. This is why many experts prefer you to only use about 30% if your total credit options. In this example, that would limit your overall debt to 300 Pounds.

How long do financial problems remain on file?

If you want to improve your credit score, then it’s helpful to have a rough idea of how long you’ll need to wait until you see some results.

The thing you need to consider is this: While smaller ‘offenses’ or ‘issues’ mostly stay on file for 1-3 years, some missed payments or defaults can remain visible for up to six years. Insolvencies are included for an even longer period of time.

Although this is decidedly bad news, you should not make too much of it either. Lenders don’t only use your credit score to assess the risk of a loan. They will also make their own calculations, look into your credit history and particularly focus on your most recent payment behaviour. If you can show them that you’ve made meaningful progress, then they are almost certain to reward this.

What about credit repair agencies?

It would obviously be even nicer if you could improve your credit score just by sitting back and letting someone else do all the work.

Credit repair agencies promise to do just that. Their claim is that they can ‘rectifiy’ your bad score and get you back on track again.

Credit repair agencies can yield results. Only, it’s highly unlikely they really will. Realistically, they can only do two things: Correct mistakes in your report – which you can do yourself – and negotiate with lenders to take out of date information from your history.

The latter part can actually be useful indeed. But it is hard to achieve meaningful results for these agencies as well. They certainly can not work wonders. Although you can get lucky sometimes, the chances are scanty and not worth the high fees these companies habitually charge you.

When it comes to improving your credit score, there is no cop out. Thankfully, there doesn’t need to be. By following the steps specified above, you can take important steps towards improving your situation – and hopefully getting the car loan you need.