Improve Your Credit Record

How To Improve Your Credit Record

Is your credit record making you want to cry? Loans are hard enough to get hold of these days even without a bad credit rate. But apart from that, it could now affect your chances of getting monthly car insurance, phone contracts and of course mortgages. But please don’t fear! There are a few little things you can do to help improve your rating over time.

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Checking your credit score

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First things first, we need to look at what affects your credit file, as there are many things that can interfere with your ability to set up a credit agreement, or receive a loan. One of which is whether or not you are on the electoral roll. If you aren’t then you are more likely to be rejected, so start by writing to your local council who will send you the application form or apply via Gov.UK at anytime. Credit agencies use the register to help track your address and ID.

Be On Time With All Credit Repayment

Secondly, this may sound obvious, but you need to avoid being late on any credit repayments as this can be a big hit on your credit record. There is an easy solution to this. By paying everything by direct debit, you’ll never miss or be late for payments. If you prefer not to pay by direct debit and there is no way you can make a payment on time, then contact the lender as soon as possible to discuss what options are available to you. You maybe able  to change your repayment schedule, or make a minimum repayment instead which won’t go against you as much in terms of your credit file.

Avoid The Rejection Spiral

If you are rejected for something, make sure you find out why. Financial lenders are like sheep, if you’ve been turned down by one, then the rest are likely to turn you down too simply because they presume the others know what they’re doing. Don’t fall victim to the rejection cycle. As soon as you’ve been rejected the first time, check your credit files immediately so you can determine the reason why and then fix it if possible. You may find that some of the information on your credit record is false or out of date. And it’s not just rejections that harm your credit score. Every time a company searches your credit record (i.e every time you apply for something) it’s logged. If you have a number of searches in a short period, it will affect your credit rating adversely.

Never Pay For A Credit Repair Company

I know when you see an advert for a credit repair company, you may be tempted to get in contact, but avoid them at all costs! You will only end up paying them for something you could easily do yourself. Either this or they will use illegal methods that you should have no part in as they could always come back to bite you. If information on your credit report genuinely can be removed or altered, then credit rating agency Experian will do it for free so there is no need to go near a credit repair company!

Build A Good Credit History

It may be that you have no credit history whatsoever. Which is fine because we all have to start somewhere. However, this does make it quite hard for companies to judge your reliability. Unfortunately lenders aren’t normally willing to give people the benefit of the doubt so you should think about building a good credit report from the get go and starting as you mean to go on. Start by borrowing money and paying it back religiously, on time, every month. If companies won’t lend to you, there are credit cards aimed at people with poor or no credit history. Be aware that they usually have high interest charges so try and only use a small amount every month and then only pay the bill during the interest-free period. Capital One does a high interest credit card especially for people who want to build a good credit history.

How To Fight An Unfair Default Or Error On Your File

  • If you discover an unfair default on your credit file, then don’t be afraid to dispute it as soon as possible otherwise it will only block all of your other applications. Unfair defaults can occur for many different reasons. It could be a simple mistake made by the credit reference agency, in which case you can contact them for it to be removed.
  • However it isn’t always that simple and more likely, the lender has put it there in error, in which case you can try the following tactics to help get your credit back on track.
  • Complain to the lender that put it onto your file. If this default is genuinely an unfair mistake, then write to them explaining why. Be firm but fair at this point. I’d advise you to keep it polite but also inform them that they’ll be contacting the Financial Ombudsman if the default isn’t removed promptly.
  • If writing the letter doesn’t work then your second option is to add a notice of correction to the file explaining the problem. For example if it was a joint account and the debt was run up once we had split. Here you should be factual and concise, so try not to go on too much about the issue.
  • Finally you should complain to the Financial Ombudsman. If the company has turned down your complaint , then the Ombudsman can adjudicate that the default is unfair and demand that it be removed. Sometimes they can even demand compensation for damage if its appropriate.
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I hope this has been helpful to some of you. Please feel free to read my article on the benefits of using pre paid credit cards here.

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