May 15

How to rebuild your credit rating

If you have bad credit score, you may be struggling to get access to a loan or other forms of credit from mainstream lenders. Having a good credit rating is vital if you want to increase your chances of being accepted for credit, as well as being able to access the best interest rates and introductory offers. A credit score is made up of numerical values and can go up or down based on your creditworthiness. So even if you have bad credit, all is not lost, you can rebuild it and we explore some of the best ways to do that.


Dissociate from a financial partner with bad credit

Your credit rating may be affected if you share a joint bank account or mortgage with a spouse or friend who has a bad credit score. This is because credit reference agencies will see you as being ‘financially linked’. Consequently, if you are concerned about your credit rating, you should make it a priority to take steps to dissociate from a financial partner with bad credit.


Credit builder cards

Another way to improve a bad credit score is by getting a credit builder card, which are aimed primarily at those struggling with a poor credit rating, and usually they do not require a credit check. These cards work by loading it with a specified amount, having done this, you then use this card as you would a debit or credit card and pay off the balance each month. With credit builder cards it is usually the case you cannot access the amount you put onto the card until you have made repayments in full.


Close unused accounts

Every time you take out a loan, big or small, or open up a new credit card account, this is also being recorded on your credit file. Sometimes it is too easy to sign up to a new credit card, especially from your local supermarket or department store. The issue is that whilst you may not be using all these cards or loans at once, potential creditors see this as potential debt and access to funds that you could use if you needed too.

Therefore, it is advised to simply cancel any credit cards or store cards that you do not use or have not used in a long time. Similarly, if you have any personal loans or payday loans for bad credit, which are incurring very small payments, try clear the debt completely. This may not be achievable in the first month, but if you can give yourself a target in a few weeks or months, you are one step closer to a strong credit file.


Sign up to the electoral register

One of the best (and easiest) ways of improving your credit rating is verifying that you are on the electoral register, and if you aren’t, signing up as soon as possible. This is because one of the first things credit reference agencies will be checking is to see if you are on the electoral roll in order to get proof of your identity and address, and if there is no information available on your file that provides these details, it will considerably reduce your chances of being accepted for credit, as well as decreasing your credit rating.

Checking if you are registered is easy: you can look online at the GOV.UK website, and if you aren’t on it, you can also make an application online through their website too. Signing up only takes five minutes, and it could be the difference between being accepted for a loan or not, so it is well worth your time doing.


Check your credit report regularly

Part of rebuilding your credit rating is being able to track it regularly and see it improve, given the numbers can go up or down. Whilst you can receive your credit score for just £2 through, you can also use free trials using the likes of Experian, Noddle and ClearScore. You can continue to pay monthly subscriptions to have access to your report and also receive notifications by SMS and email if anything changes. By following the tips above, you will be on track to creditworthiness!



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