How good is your credit rating?

More and more Brits are suffering from a poor credit rating. Credit Action, one of the UK’s main debt charities, reports that there were 1,716 County Court Judgments (CCJs) issued in the third quarter of 2010 and that the Citizens Advice Bureau deal with 9,389 debt cases every day in England and Wales.

However, even if you have poor credit, it is possible to take proactive steps to improve your credit rating.

James Jones, from credit reference agency Experian, recently said: “Although different lenders tend to employ different criteria for assessing credit applications, there are general things you can do that will certainly improve your chances of success, such as paying your bills on time and keeping a close eye on your credit report.”

1. Use credit building cards and loans

Credit building credit cards are designed for people with poor credit. While they may carry an interest rate that is higher than some other cards, they allow you to make purchases on your card and to make regular, timely payments. Using credit building cards carefully proves to lenders that you are capable of managing credit responsibly.

You could also consider bad credit loans which work in the same way.

2. Make sure your credit information is correct

Incorrect information, such as misspelt names or a wrong address, can harm your credit score. So, regularly check your credit report and correct any errors. If you don’t, you may find that you are declined for any type of credit, even credit building credit cards.

3. Pay everything on time

As well as paying all your bad credit loans and credit building cards on time, you can improve your credit rating by paying all your bills before the due date. Mortgage lenders, store card providers and even utility companies are now sharing information with credit reference agencies. Any missed or late payments will damage your credit rating.