8 reasons to improve your UK credit rating

Concept image showing an arrow going upwards alongside the word credit.

Having a bad credit rating is well…bad.

The world of finance is unforgiving – a few silly mistakes can see your credit score plummet and it can be incredibly difficult to get yourself back on the right track.

But no matter how low your credit score is, you should never give up on trying to rebuild it. The benefits of having a good credit rating are endless!

Why is a credit score important?

Having good credit is important for a number of reasons.

It can help you to borrow money, allow you access to cheaper insurance premiums and cut the costs you pay on interest – but the benefits don’t stop there.

Here are 8 reasons for you to aim for a top credit score:

1. Huge savings on interest rates

One of the main benefits of having a high credit score is that you can secure lower interest rates when taking out loans to fund expensive purchases like houses and cars.

Lenders will be willing to offer you more competitive interest rates if they believe that you are able to repay the money you have borrowed.

2. Buy that home you’ve always dreamed of

It can be incredibly difficult to get a mortgage with a bad credit score - some lenders may refuse you a loan altogether if you have an adverse credit rating.

One of the benefits of having a good credit history is that a wider variety of lenders will be willing to trust you with their money, making it easier to get a mortgage for your dream home.

3. Get a new job

Some employers – particularly those who deal with large sums of money, such as property surveyors or law and finance firms – will perform a credit check on your records before even considering you for a position.

If they believe that you struggle to manage your finances, or that your financial behaviour might affect your performance, they may turn you away.

4. Benefit from 0% interest offers

If you’re wondering how to take advantage of good credit, then one way to do it is by making the most of 0% credit offers – both from banks and certain stores.

This can allow you to spread the cost of your purchases over several months, without paying the additional interest – but be sure to pay off each payment on time and in full, or you’ll be back to square one!

5. Cut costs on your car insurance

Insurance companies take a number of things into consideration before offering you a quote – one of these is your credit score. Your insurer may raise your premium as punishment for your bad credit rating, while they could also request that you pay a deposit before taking out insurance. Some insurers might go as far as demanding you pay the year’s insurance up-front.

6. Keep your money safe

Having better credit makes it easier for you to apply for credit cards, which can help you protect your hard earned money.

If you make a purchase amounting to between £100 and £30,000, using your credit card can provide you with protection if your purchase…

  • Is faulty or damaged
  • Doesn’t match the description
  • Isn’t delivered
  • Was purchased from a retailer that has recently gone out of business

…then, credit card protection cover could help you get your money back. This is a great way to take advantage of good credit!

7. Increase your credit limit

A higher credit score usually entitles you to a higher credit limit.

Having a higher credit limit can allow you to take advantage of cashback deals offered by lenders, while having more credit available makes it easier for you to reduce your credit usage – this can improve your credit score even further.

8. Build your confidence

There’s no hiding from it - one of the disadvantages of bad credit is that it can be quite embarrassing.

It’s bad enough seeing it for yourself, but it’s even worse when somebody else sees it too, such as a potential landlord or employer. Attaining that perfect credit score will change all of that – hopefully for good!

Can I fix my credit myself?

If you’re suffering with your finances then you’ve probably thought to yourself: I need to fix my credit.

Now you know why having good credit is important, you may be wondering how you can go about fixing your credit score yourself.

Luckily for you, we’ve written a guide on improving your UK credit score here, including some helpful tips and tricks on getting your finances back on track!