Loans are still hard to get if your credit score isn’t perfect. Many of the best credit card deals that we mention are also not available to you if you don’t have the best credit record. But fear not! Even if you have a credit record that makes you want to weep, there are ways of cleaning it up over time.
- What affects your credit file?
- 10 easy ways to improve your credit record
- Should you pay to access your credit file?
If you have applied for several new loans or credit cards recently and been turned down. Financial companies are like sheep – if they find that you’ve been turned down by a few other lenders, they’re likely to turn you down too.
- If you made several applications for credit and loans at the same time because it makes you look like you’re in a desperate financial situation.
- If you have County Court Judgments (CCJs) against you or you have regularly been late with mortgage or loan payments.
- If you don’t pay your phone bills for a few months, this is considered a big black mark.
- Your age affects your points score. Too young can be as bad as being too old.
- If you’re single it can be a problem – being married gives the impression that you’re stable.
- Having the same address over a long period of time will help.
- If you are not on the electoral roll you can be rejected.
- Make sure you are on the electoral roll. If you’re not, write to your local council who will send you the registration form.
- Make your payments on time. If you cannot do this, contact the lender as soon as possible to discuss what options are available to you. You may be able to change your repayment schedule, or make a minimum repayment instead.
- If you have paid a court judgment… make sure it is shown as being settled on your credit record. If it is not, contact the court.
- If a bankruptcy order has ended or been withdrawn… and this is not shown on your credit report, send a copy of your certificate of discharge or annulment to all credit reference agencies and ask for your report to be updated.
- If you have paid off a credit account but your report doesn’t show this… contact the organisation concerned and ask them to make the necessary changes, or contact us and we will contact the relevant organisation for you.
- Avoid credit repair companies. If information on your credit report can be removed or altered, credit rating agency Experian will do it for free.
Don’t go for credit repair companies – the Office of Fair Trading has issued a warning that the advice and information given by credit repair companies may be wrong. They can even make your situation worse, not better.
- Build a good credit history. If you’ve no real credit record to speak of, it’s obviously hard for companies to judge your reliability (and they don’t usually give you the benefit of the doubt). So how do you build a good credit history?
Borrow money and pay it back religiously, on time, every month. If companies won’t lend to you, there are credit cards aimed at people with poor credit records. They have high interest charges though – so only use it a small amount every month and then pay the bill DURING the interest-free period. Capital One does a high-interest credit card (34.9%) that is aimed at people with poor credit histories. It’s a good option if a) you want the benefits of a credit card, and b) you want to repair your credit rating.
BUT ONLY USE IT IF YOU CAN PAY IT OFF – if you’re struggling to repay your bills now, don’t take out this card.
- Use credit improver. If you’re looking for something less risky, there is a new product on the market called Credit Improver, which is perfect for people with a low or non-existent score. Consumers can purchase a Credit Improver interest-free finance package, and make monthly repayments which are then reported to Equifax, increasing your credit rating and making you more attractive to lenders.
- Always check your credit report. It always makes sense to get a copy of your credit report before you apply for credit. It gives you the chance to clear up any wrong information that may stop you getting better financial products.
Just as importantly, it will help ensure you don’t get rejected for what you apply for. You can get a free credit check from Experian and start resolving any issues to improve your credit rating. Sign up for your free credit check. But if you ignore this advice and get rejected – see number 9 below!
- Don’t let rejection lead to rejection. If you are rejected, find out the reason why. Examine your credit record (it may be that it’s got false or out-of-date information on it).
If you just apply somewhere else without investigating your first rejection, you’re even more likely to get rejected the second time around. And it’s not just rejections that harm your credit score – every time a company searches your credit record (i.e every time you apply for something) it’s logged. If you have a number of searches in a short period, it will affect your credit rating adversely.
- Don’t get dragged down by debt. It’s hard to get your credit rating on an even keel if you’re constantly battling debt and missing payments. If this is you, check out our step-by-step guide to getting out of debt. The National Debtline also offers free, confidential advice (telephone 0808 808 4000).
- Make your payments on time. If you don’t think you are going to be able to pay on time then contact your lender and ask if they can make the repayments smaller and more manageable.
- Build a good credit history. If you have no real credit record then companies will find it hard to judge how reliable you and are unlikely to give you the benefit of the doubt. Borrow money and pay it back religiously on time every month. If companies won’t lend you any money there are credit cards out there especially for people with bad credit. They tend to have a high interest rate attached them so only use one if you can pay the money back before the interest kicks in, but if you can it’s a good way to get the benefits of a credit card while repairing your credit record at the same time.
- Find out why you have been rejected. If you get rejected, find out why. Go through your credit record and make sure all the information is correct and up-to-date. If you have paid a court judgement, for example, make sure it is shown as settled or if a bankruptcy order has ended make sure it says so on your report. If you don’t investigate before applying somewhere else you just increase your chances of being rejected and every credit check is logged which could adversely impact your chances of getting a loan. It is also a good thing to space out your applications as lenders might see too many applications in a short period of time as desperation.
- Avoid credit repair companies. Credit repair companies can actually make your situation worse rather than better. The Office of Fair Trading has warned that the advice and information from these companies may be wrong and similar services can be provided free of charge by other companies.
- Anyone who has been burnt in the past, for example a victim of identity theft, who is worried it might happen again.
- People who don’t trust their partner or housemate/s and need to check whether any fradulent credit applications have been made in their name.
- Anyone who is overly concerned about their credit rating.
Chat to Experian and they can tell you more about their services.
To learn more about how to clean your credit report, read on.