How long does it take to improve a credit score?
Managing and improving your credit score is a worthwhile task. A great score – or one that you’re making solid progress on improving – can help to open up your financial options. That can afford you a degree of flexibility that can make important purchases and acquisitions feasible when they’re needed the most.
If you do not have much credit history or your credit is less than perfect, you may be looking at ways to boost your credit score and wondering how long it will take to improve. With that in mind, the Everyday Loans team is taking a moment today to discuss credit scores and the usual timeframe within which they can be restored and improved upon.
It depends on where you start
As you’d expect, improving your credit rating will take more or less time depending on where you start.
There’s an important distinction to make here. Credit scores can be low for a number of different reasons. You may have had some issues with debt in the past, in which case your score will likely be lower than someone who has not had debt before. By contrast, you might be someone who has little in the way of credit history, in which case you are likely to be able to improve your credit score at a faster rate, perhaps seeing great results in as little as several months.
It’s important to consider your state of affairs and your past financial activities. If you’re coming from a place of debt, improving your credit rating may involve a longer period of time than it could for other people.
What factors are involved in determining a credit score?
As you’d expect, the algorithms that are involved in determining credit scores are highly sophisticated. In modern banking, your credit rating is a score that is carefully arrived at by appraising an individual based on a number of key metrics. These include the following, all of which can either raise or lower your final score depending on how you ‘rate’ with each:
- New credit (recent loans or other credit lines)
- Your mix of credit (the types of credit you have like loans, credit card debt or a mortgage)
- The total length of your credit history (how long you have been using credit of one variety or another)
- How you utilise credit (what types of purchases do you use credit for and what type of credit you use for those purchases)
- Your history of payment and repayment
One of the most important of these factors is your repayment history. How reliably you make payments is very important for a lender. If you have missed some payments in the past there are a few things you can do to show you are now making payments on time. An example of this could be paying your phone bill or other regular utilities using a credit card – a common way for people in the UK to raise their credit score. As long as you meet financial obligations each month, every month that passes is likely to see your credit score improve. Missing a payment on a credit card, however, will have the opposite effect on your credit rating.
Errors can affect your score
It’s sometimes the case that there are simple clerical errors on your record that can contribute to a poor credit score. In these cases, requesting support to address and fix mistakes can result in an immediate boost to your rating.
There are a number of services available, some of them free, that can help you to review your credit report. If any issues are found, you can receive help and guidance on how to have your record corrected. This is a great check to perform if you are concerned about your credit rating and wish to check all eventualities as you work to improve it.
Improving your score
We’ve covered how the restoration and improvement of your credit score can vary with time. Arriving at an estimate of a reasonable timeframe for improving your credit score is something that will require an appraisal of your financial history and activities. If you’re unsure of how to go about this, organisations like the Citizen’s Advice Bureau can help signpost you to the resources you need to get started.
There are also steps you can take to improve your credit score outside of making repayments regularly. One of the more common starting points for people looking to improve their score is simply registering on the electoral roll. This is an easy process and can help lenders to gain confidence in their assessment of you for credit by giving them basic information on who you are and where you live. With credit calculations involving the use of different data and metrics, being registered on the electoral roll arms them with more information with which to make a final decision on providing credit to you.
Consistency is key!
Many people find it daunting to address something like their credit score. When dealing with finances, it’s common for people to feel a measure of anxiety around the issue.
This is normal. Our finances are a critical part of our lives and it’s understandable to feel apprehensive about learning your credit score and starting to work toward improving it. If you’re feeling this way, you can take comfort from the simple knowledge that improving your credit rating can be done incrementally. A few small changes here and there can make a big difference over time.
While it’s unlikely that your score will improve drastically in a short amount of time, the simple act of making modest and consistent steps towards greater financial responsibility will see your score improve.
Thanks for reading!
Another day, another helpful article from the team here at Everyday Loans. We appreciate you visiting the blog section and hope you’ve found today’s article on credit ratings informative and useful. If you’re interested in applying for a loan, please visit our homepage today. There you can learn more about the loans we offer and use our application form to see if you could be approved for one of our loans.