Debt Management and Your Credit Score

How Can I Improve My Bad Credit Rating?

Are you looking to improve your credit score? Our top tips will help you to get started

man looking at his credit score while having a coffee

Having a poor credit rating can be frustrating as it severely restricts your access to certain financial products and forces you to accept higher rates of interest for the products you are accepted for.

What is my Credit Report?

When you apply for credit, the lender will use a credit referencing agency to assess your suitability and risk. The agency will look at how you have conducted yourself in the past when it comes to paying off credit and will come up with a score which will reflect that.

If you have a low credit score or a bad history of credit, then loans, credit cards and mortgages offered at inviting rates by mainstream lenders may not be available to you. However, instead of just accepting that as the way things are for you, there are a number of things you can do to boost your credit rating.

Check Your Personal Details

Not all problems with your credit rating may be financial issues. An incomplete credit profile may lead to a lower score because the credit referencing agency has difficulty verifying your identity. Therefore, you can help boost your score by making sure that all your personal details are correct.

You can check your credit report with any of the credit agencies which operate in the UK to make sure they have your correct name, date of birth and address. You should also let them know of any previous addresses and previous names you may have been called, such as a maiden name.

Making sure your name is on the electoral register is another way for credit agencies to verify your identity.

Pay off Outstanding Debt

This may be easier said than done, but paying off personal debt in a timely manner will help improve your credit rating. If you owe money to a number of different lenders, try to focus on the one with the highest interest rate and look at ways you can pay it off quicker. Credit agencies will also look at the percentage of available credit that you use. 

For example, if you have a credit card with a credit limit of £2500, using more than 25% of that credit at any one time can lower your score. Try to keep credit card use below that percentage. Not only will this help improve your credit rating, but it will also reduce the amount of interest you pay.

Avoid Taking on Additional Credit

If you leave longer between credit applications, then you can improve your credit rating. Lenders do not look favourably on people who frequently apply for various forms of credit within a short space of time.

Challenge any Inaccuracies

Everyone has the right to view a free copy of their credit report. Take the time to go through yours to find areas where you have been marked down. You may find that your rating has been lowered for something like a missed payment which turned out to be not your fault. You can challenge any such inaccuracies and ask for them to be removed from your credit report.

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