How Long Does it Take to Improve Your Credit Score?

Updated: March 21, 2024 Author:

Quick answer: If your credit score is low because of a lack of credit history, you could improve your score in months. For public records like CCJs, it takes six years from the date of issue for those to be dropped from your credit history, after which time, your score will improve. Timelines vary based on the severity of damage.

    What is a Credit Score and Why Does it Matter?

    Your credit score is your ticket to borrowing at favourable interest rates. The lower your credit score is, the more difficult it is to obtain credit, and when you do, the interest rates charged by the lender will be higher. 

    It pays to improve your credit score because you can save thousands in interest charges over the terms of loans, be that for car finance, or the largest of all your lifetime borrowing – a mortgage.

    Understanding Credit Scores on Your Credit Reports 

    The UK is slightly unique to other countries in how credit scoring is handled. There’s not one company, but three, not counting their partners like Credit Karma and CheckMyFile. The score you see is only a guide for your reference. Lenders have their own formulas to assess financial risk.  

    Experian, Equifax, and TransUnion are the three credit reference agencies used by lenders. Neither can be considered the best credit scoring company because different lenders use different agencies. Most banks use Experian, whereas applying for a mobile handset on a finance plan is likely to have a credit check run with Equifax or TransUnion. 

    For high-value financial products like mortgages and secured loans, it is not uncommon for a lender to use more than one credit reporting agency either. That’s why, when you’re working on improving your credit score, you should focus on all three. Primarily on Experian because they are the most widely used. Don’t neglect the other two though. 

    Factors that Affect Credit Scores

    Hard searches

    Any business offering you credit can run a credit check. There are two types referred to as a hard search or a soft search. 

    A soft search or a soft pull on your credit files only reveals partial data and these don’t show to companies that check your files. Only you can see those.

    A hard search is different as that does leave a footprint and lowers your credit score slightly each time a check is done. Companies checking your credit history can see when you last applied for credit and what company checked your files. Having too many hard searches done consecutively can lower your credit score significantly. After being refused credit, it’s advisable to wait a few months before applying elsewhere. 

    All negative entries

    Negative entries include late payments, defaults on other accounts, and public records such as County Court Judgements or Decrees. Whilst all negative entries drop from your files after six years, there is an exception to that rule for bankruptcy, but it only applies if the terms of bankruptcy are broken. 

    Breaching bankruptcy rules can result in a Bankruptcy Restriction Order (BRO) being put in place. BRO’s can be issued for 15 years, but if it is applied before the official discharge, it can push the data retention period to 16 years. These are very rare though. 

    In the case of bankruptcy, you may need to notify the creditors listed of the date of discharge and ask them to amend their reports with the credit reference agency. CRAs require permission from the company to make amendments to credit files.  

    The total amount of credit utilisation

    Credit card accounts, and mail order websites that issue a credit facility log details on your credit report showing your credit limit and your total usage. If you use up most of your available credit, it can lower your credit score. 

    Why Should I Improve My Credit Score

    Having a good credit score opens you up to a range of financial products. The better your credit rating is, the more favourable the borrowing terms you’ll be suitable for. This includes a wider range of credit cards, 0% balance transfers (excluding the initial transfer fee), car finance, and mortgages on good terms, with a higher likelihood of being approved for any financial product. 

    The Consequences of a Poor Credit Score

    With a poor credit score (below 40% of the Credit Reference Agencies maximum score) lenders assess you as a high-risk customer. They’ll be less likely to approve applications for finance. For those who do accept customers with a bad credit history, there’s likely to be a higher interest rate attached to the repayment terms. Credit files aren’t just used for borrowing either. They’re used to assess an applicants overall financial management. A low credit score can stop you from renting a property without a guarantor.  

    With Bad Credit, Maintaining Credit Reporting is Crucial 

    Regardless of how severely your credit report is damaged, there are ways to improve it. Six years is the maximum length of time that entries are retained for. After that period, they are dropped from your credit history, at which point, your credit score instantly improves. 

    While public records are on your credit files, your score will be low. During this time, obtaining credit will be difficult, but not impossible, and importantly, it is beneficial. Because, if you have no reporting for those six years – other than utility and phone providers – the lack of a credit history will leave your credit score low for longer. 

    You can continue to build credit while you have a poor credit history by using credit cards specifically designed for people with bad credit. If you have a low credit score because of a lack of financial reporting, credit cards for bad credit can build your history, which incrementally increases your credit score each time it is paid on time. Miss a payment, it will have the opposite effect, lowering your score further.  

    The Top Ways to Improve Your Credit Score

    The fewer negative reports are on your credit files, the faster you’ll be able to improve your score. 

    To improve your credit score fast, there are four things you can do. First, is to check that the details registered with the Electoral Roll are correct. If that’s wrong, you’ll have problems. Secondly, go through your credit reports to check their accuracy. Creditors can be challenged on the legitimacy of their reporting. Successfully challenging a negative entry to have it deleted will get you an instant boost. Or close to instant, because scores do not update daily. You may have to wait a month or two. 

    The other significant factors have to do with your current debt levels. Fast score improvements are seen in a matter of months when you pay down existing debts and close your unused accounts.