If you have a poor credit record, then you’ll know how hard it is to borrow money at a reasonable rate of interest. You may also have problems with renting a home or obtaining a mortgage. So it’s important to think ahead and repair your credit score so that you can improve your ability to borrow or rent in the future.
Although it may seem like a hopeless task, if you have a reasonable income and can avoid further unmanageable debt, then it can be done. Read on to find out how to improve your score as quickly as possible.
Check your Score
Before doing anything, it’s important to actually study your credit report. This way, you can correct any errors; credit records aren’t necessarily always right and any errors will be badly impacting your ability to borrow. If you find errors such as no record of having repaid a debt, then you can ask for your report to be amended to show the debt has been satisfied.
Information on your Score
Certain things will negatively impact your credit score, and cannot be amended. If any of the following have occurred, then you will need to work hard at improving your score.
- Moving house often is damaging to your credit score because it suggests financial instability to lenders, and causes them to worry that they won’t be able to track you down should you default on any debt. Always make sure you are on the electoral roll to reassure lenders, and try not to move too often if possible.
- Avoid late payments wherever possible. This tells lenders you are in continued financial trouble. Direct debits can help you if you’re prone to forget.
- Too many unused bank accounts can also be damaging to your score, especially if credit is available on them. This suggests to lenders that you could be tempted to borrow more than you can afford. Always close any accounts you never or rarely use. Settled and closed credit accounts are the best news ever for your credit score.
- Making lots of applications for credit within a short time also triggers lender’s alarm bells to ring. It gives the impression you are desperate for cash, and every time you are rejected for a loan your credit record is damaged further.
- From March 2015, child maintenance payments will be included on credit files. Missed payments won’t be recorded, but if a liability order is made to collect continued missed payments and arrears, then this will be recorded on your credit file.
- Pay more than minimum on credit cards, and never use more than 25% of the credit available on them. You should also close down cards you never use, and never withdraw cash on a credit card.
- Keep an eye on your credit report to see how it improves. If you have difficulty understanding the information, then use an online credit report checker which will clearly explain your score and how to continue to improve it.
By Harry Price
Harry price is a young writer from the south coast, who lives with his wife and 3 lively cocker spaniels.