MoneyMagpie

Jul 11

How to clean up your credit record

If you’re struggling to get a loan, a credit card or mortgage it’s likely that you need to clean up your credit record.

Happily, there are a number of things you can do to get to the bottom of – and improve – your credit report.

 

Clean up your credit record immediately

Credit score app

The first thing you should do to clean up your credit record is register with one of the credit report agencies – Experian, Callcredit or Equifax. For just £2 you can get a paper copy of your credit check in the post.

Alternatively, FOR FREE, you can view what’s being said about you in real time – just like the financial companies do – night or day, online.

With  Experian CreditExpert you pay £14.99 a month, but you get the first 30 days free with no obligation to remain a subscriber. So, you could just join up, get the free month, then stop.

you know why you need to clean up your credit record

On the other hand, you might very well know why no one will lend to you. Perhaps

  • you have County Court Judgements (CCJs) against you,
  • you’re bankrupt,
  • or you have done an IVA (individual voluntary arrangement).

If you’ve learnt your lesson, or your circumstances have changed so that you have more money now and you know what to do with it, you’ll want to clean up your credit record so that you can make your money work for you.

 

Why you should check your credit report

Fair score on credit report

If you’ve had trouble getting credit, it makes sense to find out what information lenders are seeing on your credit record.

This is true even if you have a pretty good idea why your credit score is low. It’s worth knowing your actual score and what is being said about you so that you can start to clean it all up.

By checking your credit record you can correct any mistakes or anything you think isn’t an accurate reflection of your overall financial situation.

what you can do with your credit record

  1. If you see ‘bad marks’ from certain companies, you can contact them directly and make your case for wiping the fault from your file.
  2. If you don’t find them very receptive and you’ve got a good case, you can complain to the Financial Ombudsman (which acts as an independent referee of the financial sector).
  3. Alternatively, you can add a Notice of Correction – a 200-word statement you can add to any entry on your credit record, explaining the situation. For example, if you missed a few payments on your credit card a couple of months back due to illness, ordinarily the bigger story doesn’t appear – just the cold, hard facts that contribute to your bad record. So, an explanation of why payments were missed may influence a lender’s decision to offer you money.
  4. With fraud and identity theft on the rise, it’s possible that someone else created a credit problem for you somewhere along the line. Checking your file could alert you to someone having stolen your identity without you knowing.  If that’s the case, get the situation sorted and add a note to your file.

 

Understanding your credit score

Credit score on phone

The higher your credit score is, the better are your chances of being lent money.

That’s basically it. Not hard!

To remove some of the mystery surrounding credit scoring, Experian have revealed to us their ‘credit scoring test’ system.

It’s worth having a look at it even if you’re looking at your report through another company – theirs will be similar.

the experian credit score

The Experian Credit Score runs from 0 to 999 and is an indication of how a lender may see you based on the information in your Credit Report. The higher your score, the greater chance you have of getting the best credit deals.

  • Very Poor = 0 to 560
  • Poor = 561 to 720
  • Fair = 721 to 880
  • Good = 881 to 960
  • Excellent = 961 to 999

 

How to clean up your credit record

Credit report on PC and smartphone

It doesn’t happen overnight. In fact it takes at least six months – probably more like a year – to get a better credit  score, particularly if you’ve been made bankrupt in the last few years.

Here’s what you do:

  1. The first thing to do is correct any mistakes on your report, as we mention about above.
  2. Got accounts you don’t need? Close them. Financial companies are paying attention to the total amount of credit available to you. So while you may not be using them, dormant accounts could still be affecting your credit score.
  3. Also, make sure you’re on the electoral roll. Weirdly, not being on that can count against you for your credit rating. Just ring up your local council to get yourself put on it. See here why it’s so important to be on the electoral roll.
  4. If you think you might have a low credit score, but you want to know how much a company would charge for a loan, ask them to do a ‘quotation search’ not a ‘credit search’. This means they will give you an idea of the interest rate they would charge but they won’t do a full credit check (and then potentially refuse you). Every time a company does a credit check on you it is recorded – particularly if they refuse you credit. This harms your credit rating.
  5. That done, the main way to improve a credit record is by borrowing money and paying it back religiously, on time, every month.
  6. Lenders are looking for proof that you’re capable of repaying borrowed money. “But how can I borrow if no one will lend to me?!” you wail. You do it by using one of the credit cards with very high interest rates, mentioned below, that exist specially for people with poor credit ratings. Then you make sure you pay the debt before the interest period kicks in.In other words, take out a credit card with a very high APR (Annual Percentage Rate), use it a small amount every month and then pay the bill every month during the interest-free period. There are a few companies that offer credit cards to people with poor credit records.

 

Go for a credit card for people who want to clean up their credit record

Happy woman holding credit card and tablet

There are a few cards on the market now that are specifically for people who have no credit history or a bad credit history.

Remember, only use these if you know you can pay them off.

You think things are bad now? Just see how you feel if you use this, can’t pay it all back and then get the massive interest slapped on every month.

On the whole, the ones with the higher interest rates are the ones that will take people with a worse credit history. Their rates are high to cover themselves if you don’t pay back.

Vanquis chrome

Vanquis Chrome Card

  1. Vanquis (part of Provident Financial which specialises in the ‘sub-prime’ market) does a Vanquis Chrome card with a typical 24.7% interest. It’s specifically aimed at people with a bad credit history (or no credit history) who can’t get other cards.
  2. For people with a worse credit history they also do a 29.3% Vanquis Chrome card.

Both of these have a borrowing limit of £4,000.

aqua

Aqua Classic Card

The Aqua Classic card has an APR of 29.7% and no upper limit for borrowing.

Also you can switch your balance to them (not sure why you would at that rate but maybe you have a debt on an even higher card?) and they charge 29.75% on that with a 3% transfer fee.

 

Go for a credit card for people who want to rebuild their credit history

If you’ve been made bankrupt in the last few years or you have started an IVA scheme, ring up the above companies for a general quote before applying. It’s quite possible even they will reject in the early stages of an application.

Aquis card

Aquis Visa Card

The Aquis Visa credit card has an APR of 29.8% and will lend up to £4,000.

CapitalOne

Capital One Platinum Card

CapitalOne has been in the poor credit area for some years. They offer the CapitalOne Classic Platinum credit card at 29.8% with a £1,500 maximum borrowing cap.

They also offer a transfer rate – theirs is 29.84% with a 3% fee.

 

keep on checking your credit score

Credit score on tablet on a desk

It’w also worth subscribing to Experian CreditExpert to see how your credit score is improving over the months – but only if you have the money.

Otherwise you could apply for your basic credit report every few months to see the change as you go on.

After all that, though, a lender’s decision is at their discretion and you could still be refused credit. Nevertheless, following our advice will hold you in good credit health.

 

How to get Credit Expert’s free online report

Experian CreditMatcher Report

  • Click on this link for Experian. It will take you to their home page where there’s a ’30-Day Free Trial’ box. Click on it, and you’ll be taken through to the registration page.
  • Now follow these simple steps:
  1. Complete the registration.
  2. Make a note of your details, including the credit file reference number.
  3. Your PIN should arrive in the post in a few days.
  4. Use the PIN to log in online and check your credit record.
  5. Inform CreditExpert of any inaccuracies.
  6. Cancel your membership (so you don’t forget or get charged anything) by phoning 0800 656 9000 and selecting Option 4. You can email but you’ll be quoting your bank details, so it’s best to speak to someone on the record.

 

WATCH THIS FUNNY VIDEO about credit scores – HOW WELL DO YOU KNOW YOURSELF…..?

 

Need to make some quick cash to pay off debts? read…

WHAT DO YOU THINK?

18 thoughts on How to clean up your credit record

  1. I am going to raise awareness for this, I worked for a major credit reporting agency and you won’t believe how many Americans are affected by poor credit, and how simply they can help their own situation. Do you not watch the news? People think that the banks are on their side, but in fact they’re trying to keep credit scores low so they make more from interest payments –

    Reply
  2. Hi,

    Interesting article.

    The equifax thresholds are incorrect they are:

    0-299 (very poor)

    300-349 (poor)

    350-399 (fair)

    475-900 (excellent)

    Reply

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