How to improve your credit rating

6. Tips to improve your credit rating

Now you know a bit more about credit reports, we thought you would like to see how you can improve it.

We have compiled a list of the best tips to help you get your credit report back in shape. You can use the contents section to get some quick tips or click on the ones that interest you to find out even more.

Contents

1. Pay on time
2. Register to vote
3. Check your report annually
4. Add a 'Notice of Correction'
5. Don't leave unnecessary 'footprints'
6. Your mobile phone bill counts!
7. Keep an eye on your associates
8. Avoid 'credit repair' companies
9. Keep track of your County Court Judgements (CCJs)
10. Don't lie
11. Be on your best behaviour
12. Close accounts you don't use...
13. ...But don't be too hasty
14. Borrow sensibly to build your credit history
15. Use our letter templates to fix credit report errors

1. Pay on time

Each record of a credit account you hold will have a list of ‘status codes’
These codes show whether you have made payments on time in the past
Records of payments are kept for 36 months
Your report will show details of payments made over the last 12 months
Underneath them will be a summary of your payments over the last 36 months
The summary will say how many payments have been made by up to three months late and over three months late
The higher the status code, the later you have made payments
If you regularly pay late, creditors are less likely to grant you the credit you request because you will present as a higher risk
If you have a history of paying your bills a few days late every time and they do decide to give you credit, it will likely be at a higher interest rate

2. Register to vote

The ‘Electoral Roll’ shows when you have registered to vote in elections (but not necessarily the dates you lived at an address)
Being on the Electoral Roll allows organisations to quickly and easily confirm that the name and address you have given on your application form is accurate
It also allows lenders to check your previous addresses more easily
This information helps them to prevent fraud and therefore lowers the risk of lending money to you which means they are more likely to say yes
To register on the electoral roll you need to be British
Ask your local authority for a form
To find your local authority go to the UK central government website:

‘Directgov – Public services all in one place’

3. Check your report annually

Make checking your credit report a yearly task
Your report can alert you to any fraudulent activity that is taking place in your name without you knowing
It will also enable you to regularly remove out-of-date information and keep your credit score strong

4. Add a ‘Notice of Correction’

A ‘Notice of Correction’ is a short explanatory statement (up to 200 words)
They can be added to an entry in your credit report to explain any circumstances surrounding the information or correct any information which is inaccurate
This information will then be available to anyone who views your report in the future and those who have viewed your report in the last six months
Lenders have to read this information but they do not have to take it into account
Adding a ‘Notice of Correction’ can be a good idea if you have had a period of illness or misfortune that has resulted in you unusually making late payments
Don’t add too many – this can deter lenders

5. Don’t leave unnecessary ‘footprints’

‘Footprints’ are details of the applications you make and show you who has searched your file
They are kept on your account for 12 months
They provide information to lenders on who, why and when you have asked for credit
When shopping around for credit, ask lenders to perform a ‘quotation search’ before you make a formal application
This quotation will give you a general idea of whether you are likely to be successful or not if you formally apply
If you get turned down for credit don’t then go on to make several more applications
Lenders can view this as either desperation, an indication that you have applied for an unmanageable amount of credit or an indication of fraudulent activity on your account
Ask your lender why they turned you down and try to fix the problem before applying again
When you get your credit report, check for multiple searches by the same lender for only one instance of credit
The credit reference agency will flag up repeat searches as ‘disputed’
Ask the credit reference agency to remove these extra searches

6. Your mobile phone bill counts!

Mobile phone bill payments also appear on your credit file
This will lower your credit score and could even affect your chances of getting further credit such as mortgages
Missed payments will stay on your account for three years

7. Keep an eye on your ‘associates’

Associates are those people that you have a financial link to
These links are created through joint judgements, joint accounts and joint credit applications or from information you gave to lenders
Information about an association is kept on your record indefinitely
Financial details about your associate are not kept on your report
If you are no longer associated with someone on your report, and can provide further information to support this, a credit reference agency may be able to break the link between you
If you have bad credit history and associate yourself with someone with a good credit history, their score will decrease and yours will rise and vice versa

8. Avoid ‘credit repair’ companies

Credit repair companies will attract customers by saying that they can improve your credit score and therefore make it easier for you to get credit
They charge for this service
If you find something wrong with your report, a credit reference agency will remove or alter it for free
The Office of Fair Trading has warned that information given by credit repair companies may be misleading, wrong or worsen your financial situation

9. Keep track of your County Court Judgements (CCJs)

If you have settled a CCJ, make sure it is shown as settled on your credit report
If it isn’t, contact the County Court and ask for a Certificate of Satisfaction (this will cost you £10)

10. Don’t lie

Make sure you tell the truth on any credit applications you make
If the information you provide doesn’t match that on your credit report then it will be taken as attempted fraud
Lying could seriously harm any applications you make in the future

11. Be on your best behaviour

If you are having trouble making repayments, talk to the lender
They should be able to arrange a repayment schedule that you can manage
This is better than burying your head in the sand and will reduce the chances of it being recorded as a missed payment on your credit history
Lenders like to see evidence that you can handle your finances well
It makes you more attractive to them because you present a lower risk

12. Close accounts you don’t use...

If you have an account that is providing you with credit you don’t need (e.g. an unused credit card without a balance), close it
This available credit will put off lenders from giving you more

13. ...but don’t be too hasty

If you have missed payments on an account within the last three years, don’t close it until the missed payment has dropped off your file
If you do, the record of the missed payment will stay on your account for a further six years

14. Borrow sensibly to build your credit history

Lenders want to see evidence of your ability to manage credit responsibly
They will be happy to see that you have a track record of successfully managing credit
This will be demonstrated by making payments on time and by clearing your monthly credit card balance
If there is no evidence of this on your report, lenders will see you as higher risk and will be put off from lending to you
A way to solve this is to get a credit card and use it to pay for something that you regularly pay for like petrol or shopping then put the money aside elsewhere and pay off your monthly balance each month
If you have a bad credit history, but have repaid all of your debts, you could try applying for a ‘Bad credit credit card’. The interest rates are high, but this is often the only way you will be able to rebuild your credit score
This will enhance your credit file
Be warned that credit you are given initially will likely be charged at higher interest rates because you represent more risk to the lender
Another option is to associate yourself with someone with a good credit history by making a joint application
Be warned that this will infringe on the other person’s credit file and may lower their credit score

15. Use our letter templates to fix credit report errors

Download our template letters here
Edit the information when prompted by the green brackets
Print the letter off
Send it to the relevant person (your credit reference agency or the organisation)
Wait for response
Enjoy a more accurate credit report and maybe even a better credit score

Next page: Helpful contacts for credit rating information
Previous page: Who to contact about errors on your credit report

Guide contents

What is a credit report?

What is a credit score and what is it for?

How to get your credit report

How to get the most from your credit report

Who to contact about errors on your credit report

Tips to improve your credit rating

Helpful contacts for credit rating information

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