How long does it take to improve your credit score?

Building a good credit score takes time and patience. But doing so can help you to secure more favourable terms on credit cards, mortgages and loans, and even improve your chances of getting a job. 

How do credit scores work?

Your credit score is a number calculated by credit reference agencies (CRAs) based on your financial history. The three main CRAs are Experian, Equifax and TransUnion. You have a different credit score with each one.

Lenders look at your credit score whenever you apply for credit. If you have a low credit score, you may find it harder to get a credit card, loan or mortgage, or you might have to pay a higher interest rate. That’s why it’s worth taking steps to improve it.

How long will it take to improve your credit score?

The length of time it takes to improve your credit score depends on how low it is and the factors that are affecting it. In some cases, it can take two to three months to see an improvement; in others, it can take a few years.

It can take even longer to build up your credit score if you have no credit history. Similarly, if you’ve been declared bankrupt, this stays on your credit record for six years – though the impact on your credit score will reduce over time.

What can impact your credit score?

Each CRA uses a different formula to calculate your credit score. There are several factors that feed into this calculation, including:

Your payment history

Making credit card and loan repayments on time is key to building a good credit history. If you’re late or completely miss a payment, your lender reports this to the CRAs and it goes on your credit record. This can negatively impact your credit score.

Your credit score can drop significantly if you’ve declared bankruptcy or have a County Court Judgment (CCJ) against you.

Whether you’ve used credit before

If you've never borrowed on credit before, you won't have a credit history at all, resulting in a low credit score. Lenders won't have any way to gauge your reliability as a borrower or how well you manage repayments.

Your credit utilisation rate

Your credit utilisation ratio is the percentage of your overall credit limit (the amount of credit you have available to you) you use. If you have a high credit utilisation ratio, your credit score tends to be lower as it suggests you are struggling to manage your finances and rely heavily on credit. 

Your application history

If you make a lot of applications for credit in a short space of time, this can have a negative impact on your credit score. 

Read more:

• Getting a credit card after bankruptcy

• Bad credit card habits to avoid

How to improve your credit score

To improve your credit score you can:

Use a credit builder card

A credit builder credit card can be a good option for those with little to no credit history. Used sensibly, it can help you build up a credit history. These cards tend to have low credit limits and high interest rates so make sure you pay off your balance in full each month – and never miss a payment.

Register on the electoral roll

It’s easy to get on the electoral roll, so if you’re not already on it, make sure you register. Lenders use the electoral roll to verify you are who you say you are, and you live where you say you live. Your credit score increases as a result.

Pay your bills on time

Late payments have a big impact on your credit score. Make sure you pay all credit payments and other bills on time, including your utility and mobile phone bills. You can set up a monthly Direct Debit to help you remember.

Reduce your debt

Paying off some of your debts reduces your credit utilisation rate and improves your credit score. Alternatively, you could try asking for a higher credit limit.

Check your credit record for mistakes

You can get a free statutory credit report from all three credit reference agencies. Once you’ve got hold of a copy, check it carefully for any mistakes as these can drag down your credit score. If you spot any errors, dispute your credit report and get it updated as soon as possible. 

Space out credit applications

Every credit application has a temporary negative impact on your credit score. But too many applications in a short amount of time can have a much bigger impact. Try to space out credit applications by at least three months, preferably six. 

It’s also worth using an eligibility checker when you apply for a credit card or loan. This only uses a soft credit check so won’t affect your credit score. It shows you how likely you are to get a particular credit card or loan, so you can apply with confidence.