According to the Equifax credit reference agency, more people check their credit report and score on New Years Day than any other day during the holiday season.
Its data shows that Christmas Day is only the third most popular day of the holiday for the essential annual task.
No matter what day you’re planning a financial health check over the Christmas holidays, use Which? Nine Simple Tips? to help you improve your credit score.
1. Check your three credit reports for errors
In the UK there are three Credit Reference Agencies (CRAs) which collect and maintain information about your borrowing and financial behavior. They are Experian, Equifax, and TransUnion.
When you apply for credit, the lender checks your credit report with one, two, or all three rating agencies. With this, along with the information in your application, he will make the decision whether or not to lend you.
To get a feel for your situation, credit rating agencies produce a credit score that reflects the information on your credit report to see how likely you are to be approved for credit. Although they all calculate your score slightly differently, most of the factors they use are the same.
A good credit score can take years to build, but one incorrect piece of information can undo all your hard work in an instant, so make sure all information held by rating agencies is accurate and up to date.
It is best to check all three credit reference agencies, as the information may differ. You will never be penalized for checking your report.
2. Add the rent payments to your credit report
Private tenants can ask their landlord to report payments to The Rental Exchange, or they can report through CreditLadder or Canopy themselves.
These companies use open banking services to allow them to track rental payments through your checking account with your permission.
CreditLadder is the only service that reports rent payments to the three credit bureaus (Equifax, Experian and TransUnion), but this service costs £ 5 per month. However, you can access the service for free if you choose to report to only one agency.
Canopy offers a similar service called RentTracking, and it will report payments to Experian and Equifax for a fee of £ 4.99 per month. It will also report your payments to a single agency for free.
City council or social housing tenants can ask their landlord to report payments to a free program called The Rental Exchange. This information will appear on your Experian credit report.
3. Make sure your name is on the invoices
Did you know that women have a lower average credit score than men?
In April earlier this year, credit score provider Credit Karma (which is powered by data from TransUnion) revealed that this “gender credit score gap” was due to women not having of financial products in their own name.
Research found that 31% of women made some or all of their financial arrangements on behalf of their partner and were less likely to have credit cards, mortgages and personal loans.
If you don’t have loans or credit cards, putting things like cell phone bills and utility bills in your name will help boost your score.
Find out more: women’s lower credit scores mean they pay almost £ 17,000 more to borrow
4. “Disconnect” with all ex-partners and roommates
If your partner or roommate has a bad credit rating, it won’t affect yours, but it will if you have a common financial product with them.
This could include a joint account that you may have created with your roommates to pay the bills and that has an overdraft facility.
When you have common financial products, a bond is formed and lenders can view your partner’s or roommate’s credit reports as well as yours when assessing an application.
So if you’ve broken up or aren’t living with the same people anymore, be sure to close or update the accounts.
5. Register on the electoral roll
Being on the voters list means that lenders can easily confirm that you live at the address listed in your application.
Experian says registering to vote could increase your score by up to 50 points. You can register to vote on the government site.
If you are not eligible to vote in the UK, you should send the three credit reference agencies proof of residence (utility bills and UK driving license) and ask them to add a note to your report to verify your identity and primary address. .
6. Make your Netflix payments count
Watching your favorite Christmas movie during the holidays could help boost your score.
Last year, Experian launched a new tool called Experian Boost that lets you increase your score by sharing details of your regular expenses, such as house tax and subscriptions to Netflix, Spotify, and Amazon Prime, which would not normally be picked up by your report.
It also records regular payments in investments and savings such as Isas and monthly savings accounts.
The tool is free for all customers with an Experian account and a checking account with a bank or building society that supports open banking.
7. Try a credit card
If 2021 has left you with a bad credit score, or if you have a “slim” credit history because you’ve never borrowed before, consider getting a credit card credit card.
These cards tend to offer a lower credit limit and an above average interest rate. This means that you will need to make sure you pay back what you spend each month to avoid paying a high interest bill.
If you repay regularly, you should see your credit score improve in six to 12 months.
8. Consider paying more of your credit card bill
IIf you have cash left after Christmas, consider paying a bit more with your credit card, instead of the minimum amount. If you only pay the minimum, lenders may assume that you are having trouble paying off your debts.
Paying off more will also leave more credit available, which could help reduce your use of credit.
Borrowing more than 90% of the limit on one credit card or any credit card you own can lower your credit score by 50 points, according to Experian. However, keeping your balance below 30% of the limit will increase it by 90 points.
Find out more: how to pay off your credit card debt
9. Use “indirect searches” for new loans
If you are planning to apply for a new credit card or loan while on vacation, be sure to check your eligibility first.
When you apply for credit, a lender will do a “deep credit search” to see if you are eligible. These leave an “imprint” on your credit report, which is visible to other lenders.
According to Experian, too many checks in a short period of time can affect your credit score for six months.
So it’s worth asking lenders to do a “soft search” rather than a strict credit search so that you know if your application will be successful.
Find out more: our guide on how to improve your credit score has more tips to help you improve your credit score