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How to repair your credit rating in 2014

John Fitzsimons
by Lovemoney Staff John Fitzsimons on 10 January 2014  |  Comments 3 comments

Want to get the best possible credit score? Follow these simple tips and you'll be well on your way!

How to repair your credit rating in 2014

Getting a decent credit record can save you some serious cash in the long run. After all, the better your credit score, the more likely it is that you’ll be accepted for the best mortgages and credit cards.

So how do you go about making sure your rating is as good as possible?

Just follow these steps.

#1 Actually get some credit!

“I’ve never had credit so my credit record is perfect.”

It’s an easy assumption to make but it’s not exactly true. A lender wants to see how you’ve managed your debt in the past in order to work out how you’ll fare in the future. If you have no credit history for them to go over, it’s harder for them to make that prediction.

You can compare credit builder credit cards over in our comparison tables.

#2 Check your credit record!

How can you know how good your credit record is without checking it?

Besides, giving your credit record the once over gives you an opportunity to pick up on any mistakes that need correcting, particularly things like accounts being registered to the wrong address.

You can get a free 30-day trial with CreditExpert via lovemoney.com, so you can make sure your record says what it should do!

#3 Set up a direct debit

The easiest way to get a black mark on your credit record is to miss a payment, whether it’s on your credit card or your mobile phone bill. And those missed payments stay on your record for years, so they can be a big deal.

Set up a direct debit, even if it’s only for the minimum payment. That way, you’ll never miss a payment again.

#4 Get on the electoral roll

One of the ways a lender determines that you are who you say you are is by checking your registered address against the electoral roll. If you don’t show up, it’s a warning sign that something may be amiss.

It’s a dead easy thing to do, so don’t let it be the reason you get turned down. Head over to About My Vote and you can register to vote to no time.

#5 Manage your cards

According to CreditExpert, some lenders look at 'card utilisation' - essentially how much of your credit limit you're using. And if you're only using a small percentage of that limit, they may score you more highly as they see this as good management of your credit.

Other boosts include having high credit limits elsewhere (as that means other lenders trust you) as well as having had certain products for a long time (as this suggests you are a stable candidate).

#6 Don’t keep applying!

Applying for a lot of credit over a short period of time is a big no-no. Put yourself in a lender’s shoes – if they have an applicant who has already applied for three different credit cards in the last six months, that borrower is going to look pretty desperate aren’t they? Would you want to lend to them?

Pick out one credit card that you want and apply for that. If you do get rejected, don’t just head straight off to apply for another! Find out why you were turned down, take steps to address the problem, and then start looking for an alternative card.

#7 Don’t let your someone else’s mistakes hurt your score

When I look at my credit record, it flags up that I am ‘financially linked’ to my wife. However, we aren’t linked simply because we are married – it’s because we have joint accounts and a mortgage in both of our names.

As a result, the way she handles credit has an impact on my credit score.

So if your partner has a had a few credit hiccups along the way, try to keep your finances separate – that way you will still have access to decent credit deals.

And should you split up, make sure you ask the credit reference agencies for a notice of disassociation. The last thing you need is your ex scuppering your credit score!

#8 Keep things stable

Again, put yourself in the lender’s shoes. The more stable you appear, the more attractive you become as a borrower. Moving house a lot, frequently changing employer and bank account – these things can raise red flags against your application.

#9 Add a notice of correction

You check your credit record with one of the main credit agencies and find there is a record of a missed payment or debt default which isn’t correct.

First you'll need to query the incorrect entry with the lender or credit reference agency, who can contact the lender on your behalf. If there's no satisfactory response, then you can take it to the Financial Ombudsman Service.

Your final option is to add a 200-word statement to your record to explain exactly what happened: a notice of correction.

You need to contact the credit agency to add this to your report, and it means that this statement will be flagged up any time you apply for credit. Experian suggests this should be used as a way to provide background info on your situation, rather than to dispute the accuracy of something in your report. So for example, you could explain why you missed a payment, perhaps because of ill health or redundancy.

#10 Consider a credit card for borrowers with bad credit

So your credit history is a bit patchy and the big name lenders don’t want anything to do with you. That doesn’t mean that credit is completely out of reach. There are a number of credit cards specifically designed for borrowers with a poor credit history.

You can compare cards for borrowers with bad credit in our comparison tables.

Get a free 30-day trial of your Experian credit report

This article has been updated

More on credit:

How to build an excellent credit history

Missed payments: how long do they stay on your credit record?

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Comments (3)

  • calista969
    Love rating 2
    calista969 said

    Dear Mr Fitzsimons with one 'm' - Agree with Mr Bellwater

    After winning a case against Experian re: their inaccurate record (sorry but they charge £15 per month for their crap service) I do not have any faith whatsoever in the current system - it is set up to dupe consumers and so is your article. Also they are not fast at all in rectifying mistakes hence DPA needs to change. Finally I prefer the old days that banks gave credit references not an impersonal credit agency that believe they are accountable to God and sell my personal data to loads of other companies for a fee - Lovemoney.com I prefer Martin Lewis

    Where are you articles about the CPP scandal and all the miselling that goes on - we rate companies as well even the ones that won Business Awards for the wrong reasons...

    By the way if anyone wishes to raise a formal complaint against Experian and they usually give you a PO BOX to do so can supply their complaints' department's e-mail address. Also won loads of cases against some credit cards who refused to renew my contract even if I used them extensively and had an excellent record - the Financial Ombudsman found against them -

    Signed - a fed up consumer...

    Report on 20 January 2014  |  Love thisLove  0 loves
  • Simon Ward
    Love rating 8
    Simon Ward said

    CPP (from 2007) - http://www.lovemoney.com/news/credit-cards-current-accounts-and-loans/credit-cards/810/clean-up-your-credit-cards

    PPI (from 2008) - http://www.lovemoney.com/news/insurance/insurance/1859/the-end-is-nigh-for-ppi

    These are the earliest examples I could find. We've written about them, and other mis-selling, regularly since.

    Report on 22 January 2014  |  Love thisLove  0 loves

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