How to repair your credit rating
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Want to get the best possible credit score? Follow these simple tips and you'll be well on your way!
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.
#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.
This article has been updated