Car Finance Centre

If you have a total credit limit of £100 with an outstanding balance of £62 (62%), your credit score would be 62 points lower than if you had a balance of £0

1. Get access to more credit but don’t use it all
The more credit you have been approved for that you don't use, the higher your credit score will be. Ideally, you never want your balance to exceed 30% of your credit limit. e.g £3000 limit, don’t exceed a £300 balance. If you know you need to apply for credit, don’t use your other cards for at least 60 days before applying for a loan, that way it's likely that all the payments you've made to date will be reflected in your credit score by the time a lender requests it!

2. Pay bills on time
Sending in your payments late can lower your credit score. Research by Lending Solutions Consulting, estimated that when you're 30 days past due and your balance is still unpaid, your score could take a 60-point hit. That kind of drop could mean a much higher interest rate on loans you take out. Set up automatic online bill payments so you'll never be late

3. A mix of revolving debt is a good thing
When it comes to your credit score, fat is good, emaciated bad. Lenders ideally like to see potential borrowers responsibly managing a mix of revolving debt (such as credit cards, where you can re-use the credit after paying it back) and instalment debt (such as a car loan or most mortgages, where you pay the same amount every month for a certain period) Consider opening another credit-card account or two, or taking out a car loan or small bank loan

4. Older proven credit ratings count for more than new credit
Old credit accounts count for more than young ones in your credit score. Lenders prefer borrowers who have responsibly managed the same accounts for years because it is a more reliable indicator of creditworthiness than a few months of exemplary behaviour on a new account. Avoid applying on your own for a lot of loans and credit cards, particularly in a short period. And avoid excessive card-hopping

5. Transfer your balance to low interest accounts
It makes sense to transfer your balance to lower interest accounts. But don’t shut the old account just to keep 'organised', keep the credit available, as by having two cards you will improve your credit rating

6. Keep your credit card accounts open
To maintain a good credit rating you must be borrowing. One way of doing this is to open a credit card account and use it very little and pay it off every month. When you feel you may not need your card any longer don't close your accounts, leave them dormant. The reasoning for this is lenders calculate your score by accounting for the difference between what credit you have available to you and what you're using. The recommendation is to keep your debt to utilization ratio to 30% of your credit card limit. Also, the longer you’ve been managing credit, the better your rating.

7. Ditch the store cards
If you think a store card is an effective way to entertain your credit rating in a positive light, you are highly mistaken. The more store cards you have whether you have been borrowing for a long time or not, the more risk you are perceived to be by lenders.

8. Pay more than the minimum
It’s no secret that paying your bills on time helps your credit score. In reality it accounts for about one-third of your credit rating score. A good rule of thumb is to pay 10% over the minimum payment. Always pay your minimum monthly payment plus the interest that is accrued every month. To really improve your credit score, you should only spend within 10% of your credit limit. So, if you're credit limit is £3000, you should aim to spend £300.

9. Bad credit is deleted over time
A majority of consumer debts, except for bankruptcies, are deleted after six years, so if you have bad credit or have had a few delinquent payments, you can re-build your credit score to above average. The older this negative information is, the less importance is associated with it, and the less it affects your credit score. Try to spread credit agreements out over time by planning what you need in advance.

10. Consolidation loans
A temptation may be to consolidate all your debts into one loan, to make your debts more manageable. This is a last resort. Stay organised and make sure you know what payments to make and when and your credit rating will reflect this.