So, you’ve checked your credit history online and you’re looking to start repairing some damage?
Improving your credit rating can help you access better deals on mortgages, loans and credit cards – so it’s well worth devoting some time and attention to it!
If you haven’t checked your credit history yet, it makes sense to do so before you apply for credit. You can have a look at it using either Noddle or ClearScore – both of which are free to use. You could also opt for a free trial for Equifax or Experian, or pay £2 to each of the three main agencies (CallCredit is the third of them) to access your statutory credit history.
Still applying for credit? Stop!
If you’re still submitting applications for credit cards or loans and you keep getting rejected, you should stop and have a rethink first.
In most cases, when you apply for credit a ‘hard footprint’ is left on your credit history. Lenders can see these footprints when you apply for credit, and too many applications might help scupper your chances of being accepted. This is because creditors might think you’re desperate to borrow money.
Should your credit report show you have a damaged history – perhaps because you’ve missed payments in the past or paid late at some point(s) over the past six years – you may find some loans and credit cards are out of reach. Credit cards and loans with the cheapest rates and rewards are often reserved for people with excellent credit scores, so applying for them when you have a bad credit score is likely to result in you being rejected. You may be better applying to a lender who specialises in credit cards for people with bad credit scores.
Notice any mistakes?
If, on your credit report, you notice something that seems out of place – say a mark against you for missing a payment, even though you always paid on time – it’s important to get these issues ironed out. Mistakes can work against you when applying for credit in the future.
Should you notice a mistake like this, it’s best to call or write to the creditor in question and let them know. If you have any proof – such as a bank statement – this will help speed things up. If it is a genuine mistake, the issue should be resolved by the creditor within around 28 days. These should then be reflected on your credit history – check – and if it isn’t updated, chase the agency to do it or add a Notice of Correction to your history.
Register to vote
Being on the electoral register is really important if you’re looking to improve your credit rating. If you’re not already registered, you may find it much harder to take out credit as lenders won’t be able to verify where you live. It’s also important that the address held for you is correct and up to date.
Having multiple credit accounts open with different providers can also work against you, even if you don’t use them and you cut up the cards ages ago. Future lenders want to be reassured that you’ll be able to afford any repayments, so if you have access to many different lines of credit already, they may be concerned that you’ll struggle to repay them.
Dump any ex-partners
If you took a financial product – anything from a bank account to a credit card with a partner or flatmate in the past, your credit histories may still be linked – even if your partner of flatmate is very much an ex. If you’ve paid off what you owed and closed the account, you can apply for a Notice of Disassociation to remove the link to them from your credit history.
Consider taking on a small, manageable level of credit
Once you’ve followed the advice above, you may wish to consider taking on a small level of credit to start repairing your damaged credit history. This is important is it helps you to prove to future lenders that you can borrow responsibly. As long as you repay on time each month, your credit history will start to gradually improve.
One of the easiest ways to do this is to take out a credit card designed for people with a less than perfect credit history – such as the Ocean credit card (representative APR 39.9%). These types of credit cards are designed specifically for people who have struggled with credit in the past.
Consider making just one or two small purchases on a credit card each month, and aim to repay the balance off in full. This way your credit rating will improve and you won’t have to worry about paying any interest. If you can’t afford the full repayment one month, making at least the minimum repayment should still help to improve your credit history.
Disclaimer: All information and links are correct at the time of publishing.