“until you've sorted out your credit history and worked towards improving it, try not to apply for further credit...”
What can I do to rebuild my credit record?
There are a number of things that you can do to help improve your credit history – but let’s start with what you can do pretty much immediately to give it a boost:
Get on the electoral roll – this is really important as lenders use it as a way to confirm your identity. If you’ve not done so already, you can register to vote here – though you don’t have to actually vote to take out credit!
Stop applying for credit – until you’ve sorted out your credit history and worked towards improving it, try not to apply for further credit. This is because every application that you make shows up on your report, regardless of whether you’ve been accepted or rejected and if lenders see a lot of applications in a short space of time, they might think you’re desperate for credit.
Cancel unused credit cards and accounts – lenders will have a look at how much credit you have access to, so if you have unused credit cards or accounts that you no longer use, it might be worth closing a few of these down.
Make sure your address is up to date – make sure all your lenders have your current address and make sure that it is the address that is showing for you on your credit history.
Open a current account – a current account in your name, with your income coming into it, will show on your credit history and give lenders comfort that you are who you say you are, and that you’ll be able to make your repayments.
“draw up a budget including all of the debts that you have to repay each month and try and stick to it...”
Longer term solutions
Manage your money responsibly
The best way to improve your credit history and boost your chances of being able to borrow is to manage your money well and make your repayments in full and on time. This will show lenders that you’re a responsible borrower and mean that they could be more willing to accept you for any form of credit. It’s important that you to try and sustain this type of behaviour – so draw up a budget including all of the debts that you have to repay each month and try and stick to it.
Take out smaller amounts of credit
You don’t have to stay away from borrowing completely when you’re trying to rebuild your credit – by managing repayments for even a small loan or credit card balance, you could demonstrate to lenders that you’re able to handle credit responsibly. By taking out a relatively small loan – like the ones available from Ocean, for example – you could get used to being able to handle credit again, as long as you make your payments on time every month, of course.
How long does it take to rebuild my credit history?
Well, this depends on how you’ve managed your money in the past. If you’ve been on certain debt management solutions, like an IVA (Individual Voluntary Arrangement), you’ve been issued with a CCJ (county court judgment) or you’ve been declared bankrupt before, then these will remain on your credit report for six years. Even something like a missed repayment will remain on your credit report for as long as this.
However, it doesn’t mean that all lenders will give you a wide berth for six years after you’ve had credit problems. If you start demonstrating that you’re able to manage credit responsibly now, some lenders will take this into account, even though they can see that you’ve had difficulties in the past.