9 Easy Steps to Fix Your Credit Rating!

Most of us have to resort to credit for acquiring the ‘big ticket’ items such as buying a home or a motor and it’s never a nice surprise if your credit application is rejected because your credit rating is too low.

Here’s 9 fresh tips to put you in the ‘box seat’ when the time comes for you to rely on a good credit rating to buy those important items.

1 Get a copy of your credit report and make sure it’s recent

The 3 main credit reference agencies, CallCredit, Experian and Equifax, are the organisations which score you in credit terms and can provide you with a full report. You’ll need to know what one or other of these reference agencies have written about you because any company you’ve approached for credit will always refer to their report on you, to find out if you’re a good prospect for repaying debt.

The good news is that these reports are easy to get: simply visit any of these 3 organisations’ websites and follow the instructions.

2 Make sure your report is free of mistakes

Surprisingly often people find that there’s an incorrect address given for them on their credit report. The trouble is, if that incorrect address has bad debt associated with it, you’ll suffer too – and unfairly.

So when you’ve got your report, check it thoroughly for errors and if you find any, get in touch with the relevant company or organisation to get them to make the appropriate amendments.

3 Being on the electoral roll is a must! 

When you’re on the electoral register, you’re on the radars of local and national authorities and your name and address are verified. This is regarded as worthy behaviour by the 3 credit reference agencies which means your credit rating is boosted. So it’s a ‘must’ and a pretty easy one to achieve for most of us!

4 Get a credit card 

Surely some mistake? Aren’t credit cards the path to ruining your finances? Well, yes, if you misuse them. But the fact is, to increase your ability to get credit, you need to build up a good credit history, i.e. a solid record of taking on debt and paying it back on time.

This can be done by using your credit card to purchase items – and making sure that you pay off the credit card debt fully each month. And if you do this, you don’t have to worry about those eye-watering APR rates that you see reported in the news.

If you already have a bad credit rating, simply apply to credit card companies who allow for this. Once again, even though the interest rates which accompany their cards may be really high, but you’ve nothing to worry about so long as you ensure that you clear the debt by the end of each month.

5 Living in the same place for some time helps

Sometimes you’ll want to move or you’ll even have to as a result of life events.

The challenge here is that in credit terms, living in the same place is viewed as a sign of predictability and reliability and this boosts your credit score.

The converse is that if you move around a lot, credit agencies can take the view that you might be trying to escape encircling creditors.

Either way, if you can stay in the one place for a bit, your credit score, all other things being equal, will improve.

6 Only apply for credit sparingly 

Every time you apply for credit, all of the credit reference agencies are informed and if you make a number of applications in a short period of time, it might be inferred that you’re in desperate need of money.

So keep those applications few and, if you get turned down, your credit score will be harmed and you should then leave it another 6 months before you try and secure any further credit.

Being refused credit makes it highly likely that you’ll be refused again if you apply for more within a short time. This can create a vicious circle.

7 Don’t use your credit card to withdraw cash 

You’ll get charged an extortionate rate every time you draw cash out using a credit card. Even worse, lenders take a very negative view of this behaviour and evidence of it has even been known to derail an application to a mortgage lender. It certainly means your credit score takes a hit.

Credit reference agencies look on credit card cash withdrawals as a symptom of bad financial management. It’s far better and cheaper to arrange an overdraft facility with your bank – but make sure you stay within the limits!

8 Pay Day Loans are a total no-no!

Pay Day Loans come with ridiculously high interest rates and credit reference agencies once again view their use as a sign of poor financial stability and always lower your credit score as a result.

Once again, if you can, ask your bank for an overdraft facility and keep within the boundaries.

9 Let time elapse 

Sadly, people can sometimes suffer catastrophic credit events, including things like being repossessed, becoming bankrupt and having County Court Judgements imposed on you. You’re looking at any of these kind of events staying on your file for at least 6 years.

Time, however, conquers all ills in credit terms and eventually your score can recover, but you have to maintain good habits such as the above to keep it healthy. 

By Marcus Simpson


SAM Conveyancing

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