There’s a lot of noise at the moment about credit scores and what to do if yours is low.

It’s understandable, as a poor credit score can seriously damage your chances of getting a mortgage, taking out a credit card or buying a car through financing.

In short, a credit score is a rating people, and businesses, are given based on their financial history. It gives potential lenders a guide on how likely you are to keep up payments on a mortgage or a credit card, for example.

And if you’re wondering what is a good credit score, then it can depend on which company you go to. Experian, for example, rates people from 0 to 999. If your score is at the lower end, that isn’t great. From 0 to 560, you’d be unlikely to get any credit card, loan or mortgage deal. The higher up your score goes the more likely you are to get accepted though at the lower end you’ll struggle to get a decent rate and might end up paying fees or deposits, depending on how bad your score is. The higher up you get, the better your chances become and if you are towards the 961 to 999 score your credit rating will be regarded as excellent and you’ll be in pole position to get the best rates.

So why do people end up with a poor credit score?

Without doubt the most influential factor is your credit or payment history. If you’ve got a record of not keeping up payments on loans and credit cards than this works against you from the off. If you owe a substantial amount and have done so for some time, then this works against you too. They might also look at your total expenses, set against your total income which, again, can be a factor in how well you might keep up payments. If you’ve been refused credit then this will harm your chances as well. Of course,if you’ve had a county court judgement against you or been declared bankrupt, then this can be pretty devastating to your score.

Finally, what can you do to improve your credit score?

Well, first of all, find out what your credit score is. It might seem obvious but how many people only discover they have a low score when they are refused credit. Also, make sure it is accurate – a frightening number of people – some one in four – discover they have a poor credit score when they shouldn’t have. If it isn’t accurate, contact the lender and get it changed.

Make sure you are on the electoral roll. Again, this might seem obvious but lenders and credit reference agencies use the electoral role to check you are who you say you are. Things like living at the same address, using the same bank, having the same employer, all for a substantial time, all help your score. If you can, pay off some or all of your debts.

Close any credit cards, store cards or mobile contracts you don’t use any more. Don’t just cut the cards up, ring the provider and cancel.

Avoid missing or making late payments, both on credit cards and on things like utility bills.

Take out a credit card – if you haven’t already got one. That might seem a strange thing to say, but if you can get a credit card and demonstrate good payment history, you are on the way to repairing your score. If you can’t get one of those, try a prepaid card which also improves your score a little.

Limit the number of credit applications you make. If you are forever seeking quotes through comparison websites, a note is made on your credit history and it looks like you might be a bad risk.

Credit scores can be complicated but well worth sorting out for the future, especially if you are looking to take out a mortgage or other type of finance.

I help a lot of my clients to review and repair their credit score, so if you’d like a conversation on this topic, please contact me on 07767 692653.