I am sceptical about firms offering to improve your credit rating – too many of them are either scams or something you can easily do yourself. But Credit Improver is authorised by the FCA, any complaints about it can be considered by the Financial Ombudsman and it is offering a “guarantee” so I decided to take a look.
How Credit Improver works
When you sign up to Credit Improver you are buying a book on how to improve your credit record. I expect it has some useful tips, but the content doesn’t really matter!
The important bit is you are given a loan to pay for the book. So you then make payments for the next year – £14.99 for the first payment then 11 monthly payments of £9.99. These payments show up on your credit file as repayments of the loan.
That’s an expensive book! But you are really buying the good marks being added to your credit record. If you stick to the Credit Improver guidelines on using credit, these loan repayments should result in your credit score improving.
You can cancel the loan at anytime, return the book and then you don’t have to pay anything more. There is a “non-guaranteed” option which is cheaper, with monthly repayments of £4.99.
Who it is aimed at
Tom Eyre, Credit Improver’s CEO, says that 70% of the people using it have a “thin” credit file. They get rejected when they apply for credit because they don’t have any history of repaying credit on their credit records. To young people with their first job or people who have moved here from abroad this is an annoying Catch 22. A year of good marks from Credit Improver may mean they can get other forms of credit.
The other 30% are people who have had problems repaying credit in the past. The Credit Improver website is clear that it is not meant for people who still have financial problems:
- If you have arrears elsewhere our product isn’t likely to make much of a difference. Your best option is to clear your arrears and make every effort to reduce your outstanding debt. Once you have done this, your credit score should naturally start to improve.
- If you already have lots of debt its doubtful our product would do enough to improve your credit score. Your best option is to make every effort to reduce your outstanding debt.
And it doesn’t make claims that it will increase your chance of getting a mortgage, which is good.
Could you ever claim on the guarantee?
To claim on the guarantee, you have to stick to the following guidelines:
- Make your Credit Improver payments on time.
- Be on the electoral roll.
- Don’t miss payments for any other credit or to any utilities providers.
- No insolvencies or County Court Judgements.
- No fraud alerts on your credit reports.
- No more than 3 credit applications in a year
- You must not be known by more than one name.
- Keep your credit utilisation below 50%.
- Don’t close any credit accounts early.
- Don’t move address.
- Check Credit Improver data is showing on your file.
- No payday loans during the plan.
- The guarantee will no longer apply if credit reference agencies change their algorithms.
Now all those are sensible from the point of view of improving a credit rating. Some of them may be pretty tricky for people though. The electoral roll will rule out non EU nationals at the moment and, post-Brexit, may rule out EU nationals. Telling millennials they can’t move for a year… People may not realise getting a new phone contract or paying car insurance monthly counts as a credit application. They may forget they shouldn’t change their name after getting married.
How much does Credit Improver help?
Time tends to heal all credit record problems. Many people with a poor credit record would have their credit score improve if they stick to those guidelines for a year even if they don’t sign up to Credit Improver. People with a thin credit record may well be able to get a “bad credit” card if they are employed, on the electoral roll, have lived in the same place for more than a year and haven’t made many credit applications.
The Credit Improver green ticks added to your credit record may not make that much difference if your credit score is going to be improving anyway. And how much is a small improvement in your credit record actually worth? It’s hard to tell if the £125 Credit Improver costs over the year is good value for money. I do wonder if some people will expect more of an improvement than they will see.
I like the fact they are FCA-authorised and that not much can go wrong, because you can always cancel the contract and return the book if you can’t make the payments. I also like the fact that they are clear on their website that they won’t suit everyone.
This may be like joining a slimming club. You would lose the same amount of weight if you calorie-counted anyway, but belonging to the club means you keep weighing and think the club works. The Credit Improver finance may not make a big difference itself, but if you stick to their guidelines you probably will get a better credit score at the end of the year and feel happy with the process.