How to check and improve your credit score

How do you check your credit score? And how can you improve it?

So, you're looking to lease your next car, but you're not quite sure where your credit score stands?

Don't worry – you're not alone.

But whether you're looking to lease your next car, get a mortgage, or take out any other kind of loan, your credit score is going to play a big part in your finance application.

The good news is that checking and improving it is easier than you might think.

So, it's really important to check your credit history regularly.

Not just to spot any sneaky errors, but also to make sure you don't accidentally damage your score by applying for finance you're likely to be declined for.

What is a credit score?

Think of your credit score as your financial report card.

It's how lenders assess the risk when lending you money, and it's compiled based on your borrowing history and how reliable you've been at paying everything back on time.

Your credit report is held by companies known as credit reference agencies (CRAs). There are three main ones in the UK – Experian, Equifax and TransUnion.

Each is responsible for creating and holding your credit reports, and it's these that lenders will review before accepting your finance application.

Now, here's where it gets a bit confusing. Each CRA has a different maximum credit score. Experian scores you out of 999, Equifax out of 700, and TransUnion offers a maximum of 710.

It's important to bear this in mind when you're checking your credit score – even with the same information, your score will be different across these different services.

The closer you are to the maximum credit score for each CRA, the less of a lending risk you're perceived to be. So, the more likely you are to be accepted for credit.

But here's something important to remember: even a perfect credit score won't guarantee you'll get finance on your chosen lease car deal.

You'll still need to meet age, licence and residency requirements, as well as proving affordability.

How to check your credit score

Did you know that one in three UK credit reports contain errors? These errors can be the difference between being accepted or declined for your new car.

You can check, correct and improve your credit score with UK Credit Ratings. Get a free 14-day trial with no exit fees – just £19.95 a month afterwards if you don’t cancel at the end of your trial.

We'd recommend checking your credit file every few months to make sure it's correct and up-to-date.

If you do find anything that looks wrong, let the relevant CRA know straight away. They'll then amend their records and put a 'notice of correction' on your report explaining why the information shown is incorrect.

Extras such as credit monitoring and fraud alerts do cost a bit more, but they're worth considering if you want to stay one step ahead when it comes to your credit history.

Improving your credit score

The good news? There are plenty of things you can do to give your credit score a boost.

Register to vote

This one's simple but important. Registering on the electoral roll at your current address is integral to linking you to where you live.

When you register to vote, your electoral details are registered on your credit report.

This makes it easy for lenders to confirm your name and address, and your credit score will increase as a result.

It'll also speed up the time it takes to get approved for any finance application you make.

Without it, you might be asked for additional forms of identity and proof of address – and nobody wants extra paperwork.

Build your credit history

Here's the thing: a credit score is a way for lenders to predict your financial reliability based on your past behaviour.

So, if you've got minimal or no credit history, it can cause issues.

Without this information to assess you, your credit score will be lower to reflect that uncertainty. This is particularly common among younger people and those who haven't been living in the UK for very long.

The solution? Build up your credit history by having a bank account, getting a credit card (and paying it off on time), and managing household bills well.

Showing you can borrow money and pay it back is a sure-fire way to improve your credit score.

Pay debt reliably

As we've mentioned, it's actually a good idea to accrue some debt if you're looking to improve your credit score. It shows lenders how reliable you are for future lending.

But, and this is important, you must always pay this debt off on time to keep your credit rating healthy.

Some examples of what you can do would be:

• Get a credit card and pay for fuel with it
• Small online purchases that you pay off the next month

It's those older, well-managed accounts that will best improve your credit score.

Keep credit utilisation low

Credit utilisation refers to the percentage of your credit limit that you're currently using.

For example, if your credit limit is £500 and you're currently borrowing £250, your credit utilisation is 50%.

The lower this percentage, the better it'll reflect in your credit score. Below 25% is what you should aim for where possible.

This needs to be carefully balanced against having a reasonable credit limit. Taking out lots of credit cards could reduce your credit utilisation, but it could also suggest that you're overly reliant on borrowing. Each new account also increases your vulnerability to fraud and identity theft.

So, maintaining a sensible credit limit based on your needs and only using up to 25% of that total where possible is the best strategy for maximising your credit health.

How long will it take to improve my credit score?

Some changes you can make instantly, while others can only happen gradually over time.

In either case, you'll likely need to wait an additional three months for the updated information to reach the CRAs and for your credit score to be updated. Patience is key here.

The benefits of improving your credit score

There are several benefits to having a good credit score beyond just increasing the likelihood you'll get accepted for credit:

• Lower interest rates – A good credit score is likely to mean lower interest rates on any new loans. As you're seen as a lower risk, lenders will be keener to persuade you to borrow from them, so they'll want to make the cost of the loan cheaper
• Higher credit limits – The better your score, the more you'll be able to borrow
• More choice – Your increased likelihood of getting accepted for finance will give you access to a wider range of offers and providers

Your credit score is one of the most important reflections of your financial health. Looking after it won't just open doors when you're borrowing money – it could help you save on both the amount you can borrow and any interest that's applied.

And when it comes to leasing your next car? A healthy credit score puts you firmly in the driving seat.