With a bad credit rating, you may be limited in the amount of finance you can borrow. Here are a number of tips to help you improve it.
Check carefully that all the details on your credit record are correct
It is not uncommon for your credit record to be out of date. You may have defaults listed that you have since cleared.
Make sure no further mistakes exist in your file, for instance wrongly put payments or debt that is not yours. Also, do not forget to register using your current address with the electoral roll register, as this can have a big impact on your chances of getting finance.
Check that all the details actually apply to you
In some cases, the debts of a former spouse, previous tenant/owner of your property, or other family member can appear on your credit record. If this happens to you, you can ask for a Notice of Disassociation form from the credit reference agencies, which you can fill in to legally distance yourself from the debts of others.
Clean your credit file
If you find any listed bad debts that are already cleared, it’s possible to have them removed, although you’ll need to have the cooperation of the creditor. The same applies to termination notices.
In some cases it’s possible to remove CCJs as well, although for this to happen you’ll have to prove that the CCJ was issued in error, and not that you have simply cleared the debt since the judgement was issued.
Pay off small debts
Try and settle as many of the small bad debts as you can afford, and ensure that this is reflected on your credit report.
Apply for credit
This is not as strange as it sounds! By applying for credit with a company that caters for those with bad credit, and is likely to accept your application, your credit rating will be strengthened as long as you make your repayments in time. Successfully obtaining finance, such as a credit card, and responsibly maintaining your monthly payments will help offset any ‘black marks’ on your credit record that you’ve picked up in the past.
Make less applications
It is also important to avoid making lots of applications for loans or all types of credit at once and in a rush, including things you might not know affects your rating, including shopping with bad credit catalogues.
Once a lender sees all these applications at once, he or she will take that you are very desperate and a hazard. Make sure you have spaced out your credit applications.
Another important thing is being honest about yourself and only apply for the loan or credit you are sure you will get. You can ask a lender initially to carry out a quotation search to get rates first as compared to asking for a credit search.
You must inspire confidence to those lenders who have decided to give you the credit you are looking for. Do this by paying what you have borrowed.
However, it also means the credit will come with high rate of interest. You can spend a little of that credit as you continue clearing the credit balance and you will not be charged interest. This is something you should aim at doing for half a year.
Make prompt repayments
Do not fail to pay the agreed repayment by doing all you can even if you have to talk to the lender for smaller structured repayments, especially if you are struggling. In case of any credit agreement you are not using, simply close it down.
Also, avoid any form of joint finance or borrowing with another individual who might have a bad credit rating; it will lower your credit score as well. In case you have moved apart, alert the lender so that your obligations can be differentiated.
As you make your credit application in a bid to improve your credit rating, whether you need the funds or not, you should know the lender likes to see your long-term history of employment, a fixed landline phone number compared to a mobile phone’s, a place you own or you have lived for years and a long period of membership with their agency or bank.