How to repair your credit rating

Companies which claim to be able to clean up your credit history offer nothing that you can't do for yourself.

Type the words 'credit repair' into a search engine and any number of companies will pop up offering to 'clean your credit reference file' or 'restore your credit rating'. At a price, naturally.

Typically, credit repair companies claim they can remove unfavourable information, such as County Court Judgments (CCJs), from your credit files, ensuring that you have a better chance of being able to borrow money at favourable rates.

Unfortunately, some of these companies are dodgy to say the least and even the respectable ones can't offer you any more than you can do by yourself. For free.

For a start, a CCJ – the biggest black mark you can possibly have on your credit file, apart from bankruptcy – cannot be removed unless it has been incorrectly granted or you've paid off the relevant creditor within a month of it being made against you. Only then will all mention of a CCJ be removed from court records and credit reference files.

Judgments paid after one month can be marked as 'satisfied' by applying to the county court for a Certificate of Satisfaction which will be passed on to the credit reference agencies. Otherwise it will remain on your file for six years.

How you can improve your credit rating

If you think you may be scoring poorly with lenders when applying for loans or credit cards, there are a number of things you can do to improve matters.

Check your credit report

The first step, of course, is to apply for a copy of your credit file from one of the three main agencies – Experian, Equifax and CallCredit (via its Noddle brand) – so that you can check the information it holds is correct. The law entitles you to have incorrect information rectified or removed from your file or to have a note put on the file which explains why you think the information is wrong. Credit reference agencies have to tell you within 28 days of hearing from you if they have taken action to correct your file and, if not, why they have not done so.

Checking your credit report will also show up any signs of fraud. Identity theft is a fast-growing crime so look out for any accounts you don't recognise and query them.

Cancel unnecessary cards

The next thing to check for is whether any old and unused credit or store cards are listed. Remember lenders don't just look at your file to see if you have missed or defaulted on payments, they also want to know how much credit is already available to you and the balances you've got on each of your cards. If you've got a lot of cards and/or a lot of available credit, even if you don't use it, there's too much potential for you to go on a wild spending spree. So, contact the relevant companies and cancel any unused cards. An added bonus is that you may, in the future, become eligible for any future offers, as you'll be considered a new customer.

Make sure you're on the electoral roll

If the file doesn't state your electoral roll information, then get in touch with your local council immediately to get registered. You're unlikely to get credit at all if you're not on the electoral roll.

Pay your bills on time!

And finally, pay all your bills on time, every time, month in, month out, even if you're only able to make minimum payments. Prospective lenders like to see a steady payment history – the longer the better. Although defaults remain on your file for six years, lenders are more concerned with how well you are currently managing your payments rather than being interested in what might have happened three or four years previously.

Whether you've got a great credit history or not, it's a good idea to send off for your credit files occasionally to make sure the information they hold is correct. You can do this via lovemoney, as we've partnered with Experian, which is offering a free 30-day trial of CreditExpert. Just remember to cancel your membership before the 30-day trial period is up, to avoid being charged in the future.

More on credit ratings and debt

What REALLY damages your credit rating

10 astonishing lies about credit ratings

Where to get free debt advice

How do I get out of debt?


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