Have you checked your credit score recently only to be disappointed with the figure that is staring back at you? Perhaps you know why your credit score is bad; you went through some financial troubles and now you want to build your credit rating back to good health? Or, maybe you are shocked your score isn’t better? There could be a number of reasons why your score isn’t great – it could be that you have no credit history at all, or that you are using all of your available credit (even if this is just a couple hundred of pounds). No matter what applies, you can improve your credit score, and here’s how…
*This is a collaborative post.
Make sure all of your personal information is up-to-date – The first thing you need to do is make sure that all of your personal information is up-to-date. If you have an old telephone number or address on your credit files, it will be difficult for lenders to verify who you are. It is important to make sure you are on the electoral roll too. This is probably the easiest and quickest way to boost your score.
Consider every lending option carefully – When rebuilding your credit score, people may tell you that you shouldn’t lend any more money. But this does depend on your individual circumstance. If you are in debt in a number of different places, you may want to consider secured lending as a way of centralising all of your debts in one place so that you only have to pay one creditor per month. On the other side, if your credit rating is poor because you have never had a credit card before, then you are going to need to take one out so that you can make monthly payments and build your score back up.
Allow your credit accounts to mature – Another factor that influences your credit rating is the average age of your accounts. If the average age of your credit accounts is below 33 months, this will be a negative factor. Therefore, once you pay off a card, don’t close the account. Keep it open so that the average age grows.
Reduce the amount of credit you are using – This may sound like common sense, but you do need to start paying off your debts. Your credit score isn’t so much based on the credit you have available to you. It is rather based on how much of your credit you are utilising. If you have £1,000 of available credit and you are using all of it, it reflects badly on your score. However, if you are using £1,000 of credit yet you have £5,000 available to you, this is a positive. Look to pay off cards while also seeing if you can increase your limit.
So there you have it: some of the steps you should take to build your credit score back to good health. If you follow the advice above, you should see steady progress in terms of improving your score over the next few months and years. Remember, a credit score cannot be rebuilt overnight, so you do need to be patient, but it will be worth it in the end.