Having a poor credit history can be immensely frustrating, especially if you have bade farewell to a reckless past and embraced a more fiscally responsible future. If this is you, there are things you can do to improve your rating…
Get a hold of your report
You need to know what your dealing with before you can fix it. Use a trusted source like creditexpert.co.uk to get a free credit report online. It’s important that you obtain the report from all three agencies – Call Credit, Equifax and Experian – as they may hold different information (and errors) on your file.
Register on the electoral roll
Failing to register on the electoral roll can diminish your chances of getting credit in the first place, as banks need to confirm your address (and may not tell you the reasons why they cannot). Surprisingly, no credit report is just as bad as a poor one – so get on the register, open an account and start using money to build up a solid rating.
Manage your money
If you’ve suffered with financial problems in the past, don’t ignore it now. Take on small – but consistent – amounts of debt and slowly repay. Many credit cards will unscrupulously lend to people with a poor score, so if you know you are able to repay money, get one of these cards and use it sensibly to build up a reputation for good money management. Avoid late payments, and always make more than the minimum repayment each month. Late payments can have a drastic effect on your credit rating. If you do encounter difficulties, address them immediately
Be a stable borrower
Demonstrating your stability as a functioning member of society will always help your score. Being employed full time, owning a home, staying at the same address, sticking with the same bank – all these ‘tactics’ show stability and could increase your rating. Keep address records up to date with all your banks and credit cards.
Cancel unused accounts
Having access to multiple lines of credit can really impact your score – even if you’re not using them. If you have old, active but unused credit cards, cancel them and cut them up. This will reduce the amount of credit available to you and show that you do not ‘depend’ on credit.
Deal with defaults
If lenders see defaults on your credit report, they may reject your application outright. Worst of all, some of the defaults on your report may be incorrect or unfair – so it’s important to get such things straightened out, and quickly. If you see an erroneous default on your report, contact the lender and explain why it shouldn’t be there. If they agree, it will be removed from your report within a month. If there is a dispute, you should take it up with the Financial Ombudsman, who can assess the situation to decide if the default is unjust, and remove it themselves. Failing that you should supply the lender with a ‘note of correction’ explaining the extenuating reasons that you may have had for defaulting.
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