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Whether you are brand new to the world of credit and borrowing, or you have made financial mistakes in the past and you’re now back on track with your budgeting, there are things you can do to repair your credit score. We’re going to look at some of the ways you can make a difference.
Getting to know the score.
First, find out where you are in terms of credit. If you have made poor financial decisions in the past, your credit score might show past defaults and even CCJs. To get any kind of credit rating, you have to have had some kind of credit – a credit card, an overdraft, a loan. How well you manage these and the disposable income you have to play with each month are some of the things taken into consideration for credit scoring.
There are several credit reference agencies which will hold information about you. For example, Experian, Noddle, Clearscore – most offer at least a free trial. (But remember to cancel this before the free trial ends or you could end up paying a monthly fee for the service).
Is everything right?
It is vital that information held on you is correct as this can have a big impact on a company’s decision on whether to lend to you or not. Is your full name correct? Are you registered at your home address on the Electoral Roll? (Also relevant if you want to vote in elections!) If your record is showing any defaults or outstanding balances, are they accurate? If not, you are entitled to dispute the records and to ask for corrections to be made.
Building up your credit score.
There are credit cards on the market now, designed for people taking their first steps in borrowing and for those of us who have made mistakes in the past. Vanquis is one such provider. They advertise their cards as a credit builder and offer good advice about getting back on track. Most lenders nowadays offer the facility to “check your eligibility” – this in effect is a soft search, so (unlike repeated full searches) won’t harm your credit rating.
Know your limits.
Always stay within your credit limits. Credit card companies like to see that you are managing your money well, sticking to the limit and making regular payments on time. The cards that are specifically designed to repair poor credit histories are reviewed more regularly. If your account is managed well, you could be offered a credit limit increase. Please note you don’t have to accept the increase. If you feel like you will be tempted to spend outside your set budget, the you are within your rights to turn down any increases.
Make regular payments.
Try not to miss a payment and always pay on time. If you go over, even by just a day, you could be hit with extra charges which will then throw your budget out if kilter the following month. It’s a vicious circle! Make a note of the due date in your diary, stick a post-it in the fridge door, set a calendar alert in your phone – just give yourself a reminder of when you are supposed to pay. Again, a well maintained account will get your credit score moving in the right direction.
Keep in touch.
Communication is key. Stay in touch with your bank or credit card provider and let them know as soon as possible of any changes in your circumstances, particularly ones that will affect your ability to make expected payments. As a rule, financial institutions are happy to work with you to find solutions. They can only do that if you keep them up to date with what’s happening, If they don’t hear from you, they aren’t able to ascertain the difference between “can’t pay” and “won’t pay”.
Do you have any other suggestions for improving your credit score? Pop in the comments and let us know.