Five Ways To Improve Your Credit Score

Five Ways to Improve your Credit Score

If you have poor credit, then you can feel as if you’re doomed. A bad credit history makes it more difficult to take out loans, credit cards, mobile phone contracts and even to rent a home. However, while there are no magic bullets for instantly fixing a very bad score, following these five tips can and will help towards improving your credit rating.

Checking your Credit Report

Before becoming unduly anxious about your rating, it’s always a good idea to check it first. Credit scores change and ‘black lists’ do not exist. Your credit score is simply a figure generated as a result of the information contained in your report. The good news is that it’s only your most recent credit history that concerns lenders, and as long as you have no CCJ’s which stay on your report for six years, your credit report can improve considerably within only two years provided your debts have been paid and you have no further defaults.

Errors on your Report

Another important reason for checking your report is to see if there are any errors or mistakes, which do happen. Lenders do sometimes fail to inform credit agencies of satisfied debts. Always go through your report carefully for anything which looks wrong. If you’re having trouble understanding your report, then provide clear explanations about your report, along with personalised suggestions for how to improve it. If you do find an error, then you should contact either the original credit provider and ask them to update their records, or the credit reference agency themselves with evidence of why the information they have is wrong.

improve credit rating
Photo By Simon Cunningham

Improving your Score

Fixing bad credit relies on showing lenders you’re responsible with money and have no intention on defaulting on loans. So to improve your score, you’ll need to do the following:

  • Avoid multiple applications for loans and credit. If you apply for too many at once, then lenders view this as desperation which will negatively impact your score. You should also apply only for credit you’re likely to be approved for. If you make applications for credit when you’re clearly not the right applicant, you’re only harming you score.
  • Prove to lenders you can borrow responsibly by taking out a credit building credit card. However, you will need the strength of will not to spend, spend, spend, but instead use it to make normal everyday purchases such as groceries, and REPAY IN FULL at the end of each month. Failure to do this will only result in more debt, and an even worse credit record.
  • Get yourself on the electoral roll. This helps lenders distinguish between legitimate and fraudulent applicants, as well as telling them you’re a stable responsible citizen.
  • Avoid moving too often. This can’t always be helped, but too many moves suggest you’re a bad risk.
  • Balance your money management carefully by making regular repayments, not using any of your available lines of credit to the max, and closing down any unused accounts.

Wendy Lin is a freelance writer and entrepreneur. She has a passion for art and watercolour painting and enjoys travelling with her young family.

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