If you are struggling with debt, you should consider contacting your lender as soon as possible to ask for help. If things get too much, it may be worth looking into a debt solution – visit Our Site to see how we can help today.
One reason you might have a bad credit score is if you regularly fail to make credit card or loan repayments on time – or miss them altogether.
Below are some ways our experts recommend in improving your credit score.
1. Register on the electoral roll
Get your name on the electoral register but you might want to opt out of the “open register” which shares your contact details with companies. By opting out you can avoid getting lots of junk mail.
Make it clear that you only want to be listed on the “full electoral register”.
2. Pay your bills on time
Paying the mortgage and credit card and utility bills on time is the best way of proving to lenders that you can manage your finances. If you find yourself struggling to pay bills, or left short, it may be time to look at debt solutions
3. Pay your rent on time
A scheme called the Rental Exchange Initiative, allows private renters to boost their Experian credit score for free.
You pay rent to a middle agent called Credit Ladder, which passes it onto the landlord or letting agent, and then lets Experian know the payment has been made on time.
4. Use a credit card little and often
This is one of best ways for you to improve your credit score, as it shows you can manage borrowing on a regular basis.
Having no credit to your name at all gives lenders nothing to work with. Consider paying off your bill each month to avoid carrying over a balance and avoid being subject to high interest rates. If you’re increasingly reliant on using credit cards, and stuck in a loop of repaying and using, see how we can help
5. Check if you are linked to another person
Being linked to someone else financially through a joint account, mortgage or loan could affect how lenders view you if they have a poor rating.
If you end financial ties with someone, contact the credit reference agency to get them removed from your own credit report. You can check this in the “financial associations” section.
6. Use less of the credit made available to you
If you have a credit limit of £3,000, for example, and you’ve spent £1,500 then your credit use is 50%. As a rule, it’s best to keep this ratio under 30%.
If your credit limit is reduced (because, say, you have been struggling with repayments), a lower limit may increase your credit utilisation rate – so aim to stick to 30% or under.
7. Take out a credit builder credit card
If you have a bad credit rating, another thing you can do is build a decent recent history to show that you can be responsible with credit. The catch-22 is that because you have a poor score, getting credit is difficult.
However, with a credit builder card, this is easier as they typically accept those with low scores. Be warned: you must pay the card off in full each month as high interest rates – from 19.9% all the way up to 59.9% – are normal.
8. Don’t withdraw cash on credit cards
Many lenders see this as evidence of poor money management. Not only that, the interest can be very high.
9. Pay for insurance upfront
Paying for home insurance or car insurance in monthly instalments rather than upfront can affect your credit score.
You are entering into a credit agreement – a type of high-interest loan – so the insurer will look at your credit file to check if you can pay them back.
These “hard checks”, visible to other lenders, can bring down your score. Paying monthly is also more expensive.
10. Fix errors on your credit record
Write to any company that you believe has mistakenly registered a defaulted payment on your report to ask for it to be removed, otherwise you’ll be taking it to the Financial Ombudsman Service.
Errors such as an incorrect name or address can be removed from your credit report by disputing the matter with the credit reference agency – as long as the address is not associated with any of your accounts. This is what’s known as a ‘Notice of Correction’.