With 1,603 County Court Judgments (CCJs) issued every day in the final quarter of 2010 and a person in the UK declared insolvent or bankrupt every 4.28 minutes, it’s no surprise that thousands are struggling with poor credit ratings.
When people get back on their feet and regain control of their finances, one of the first things they want to know is how to improve their credit rating. Our guide outlines five easy ways you can rebuild your credit standing.
1. Make sure the information on your credit file is correct
A common reason why people have a less than perfect credit rating is because there is incorrect or inaccurate information on file. If the information held by a credit reference agency is incorrect it stands to reason that there may be discrepancies when you come to apply for more credit in the future.
For example, you may not have changed your address on certain financial products when you moved home. Alternatively, your bank may have made an error regarding a payment which they have never corrected. It is wise to look carefully at your credit information in order to make sure that it is accurate.
2. Get on the electoral roll
One of the simplest ways that you can improve your credit rating is by ensuring you are on the electoral register. This is a crucial part of the underwriting process for many lenders and you will often be penalised in a credit score if you’re not on the voter’s roll at your current address.
You don’t have to wait until the annual reminder to be added to the electoral roll. You can write to your local council and be added at any time.
3. Use credit builder credit cards
There are lots of credit cards for bad credit available in the market. These cards are offered to applicants with a less than perfect/slim credit history and are designed to help you improve your credit rating by demonstrating that you are capable of managing credit responsibly.
Credit builder credit cards typically carry higher interest rates than other credit cards and so it’s vital that you compare credit cards before choosing one. The aim of credit builder credit cards is that you use them for purchases and then pay off your balance in full each month on time. Over a few months, your credit record will show that you have consistently made a payment to your credit card each month, demonstrating to future lenders that you are a good risk and that you will pay your commitments.
4. Make sure you manage your credit responsibly
The best way that you can improve your credit rating is to ensure you make all payments to loans, credit cards for bad credit, mortgages, secured loans and store cards on time.
Your credit file will record any late or missed payments and so it’s vital that you try and ensure all your payments are made in full and in a timely fashion every month. Only by demonstrating that you can manage financial commitments will you be granted further credit in future.
5. Regularly review your credit file
Once you have started using credit cards for bad credit and you are making your payments every month, it is important that you obtain a copy of your credit file on a regular basis to ensure the information remains accurate.
Regularly reviewing your credit file will ensure that the information held about you is accurate and up to date and will help you monitor for any fraudulent activity taking place under your name. Most experts recommend obtaining a copy of your credit file from a credit reference agency, such as Experian, at least once every year.
