How to rebuild your credit rating
The higher your credit score, the more likely you are to get credit at competitive rates. Banks, lenders, mobile phone providers and even car insurance companies use credit scores to decide whether or not to give you a credit card, loan, mobile phone contract, mortgage or other line of credit.
It’s important to do all that you can to build or rebuild your credit rating and obtain the best rates and lower the cost of borrowing.
Here is an excellent guide to understanding how credit scores work from MoneySavingExpert.
Small actions can lower your credit rating, such as a missed council tax payment, defaulted utility bill or going over your overdraft, but there a plenty of ways to fix it.
Start rebuilding your financial future now:
1. Check your credit score.
You can check your credit score for free at Noddle.
The report should make some suggestions for you to improve your score.
2. Check all of the details on your credit report.
Be sure to unlink yourself from any old partners, and be sure that old flatmates’ credit reports aren’t linked to yours. Be sure that your address details are up to date, and that you recognise all of the searches. If you don’t recognise any, ask the relevant credit referencing agencies to remove them.
3. Get on the electoral roll.
This is a major one, and very easy to sort out. If you’re not on the electoral roll yet, contact your local council and register.
4. Don’t miss any credit card or loan repayments.
By setting up direct debits, you’ll ensure that your payments aren’t missed, but if you get into difficulty, contact your lender and they should be able to help.
5. Apply for as little credit as you can.
Particularly when you move house, it can be easy to generate a lot of searches. From letting agents and utility companies, to mobile phone contracts and credit cards. Apply for as little as you need so there isn’t a sudden surge in searches.
6. Avoid payday loans.
While a guarantor loan, such as a†George Banco’s loan, will help you to improve your credit score when you pay off your loan on time, a payday loan will have a negative impact on your credit rating and could stop you from getting credit and mortgages for years to come. Our RateDropper loan will reward you for making your repayments on time by lowering your APR/monthly payments, and we’ll report your repayments to the credit referencing agencies to help you improve†your credit score. You can apply here now.
7. Plan your budget.
Use a budget calculator to manage your incomings and outgoings and to ensure that all bills are paid on time. The free Spending Tracker app is an excellent tool for logging all transactions. Also available for free on android.