Simple Steps to Improving Your Credit Rating

Andrew Regan asked:

The first step to improving your credit rating is to check your credit report. This contains the history of your credit accounts and repayment record and is one of the main sources of information used to calculate your credit score. Make sure it’s accurate and up-to-date and if you disagree with anything, contact the relevant lender, explain the problem and ask them to remove or amend the entry.

Next, ensure you are registered to vote, as lenders use the electoral roll to check that you live where you claim to live, as a precaution against fraud. If you aren’t registered or are registered at another address, they may ask for further proof of residence or even turn down your application.

If you have divorced or separated from a partner and had a joint mortgage, bank, credit card or utility account then tell your lenders, cancel the joint accounts and reapportion the debt between you. If you don’t and your ex-partner has a patchy credit history, it could in turn lower your score.

Each credit application you make will trigger a search of your credit report and leave a record known as a footprint. Never fire off random applications for credit in the hope that one will be accepted, as if potential lenders see lots of footprints, they may assume you are desperate for money or even suspect a fraud. Ask for a quotation search, which will not show up to other lenders.

If you have unused credit accounts, close these and consider rolling up several expensive debts into a single, more cost-effective loan. Always make repayments on time and never take out more credit to pay off existing loans – if you’re having trouble, let your lenders know as they may be able to work out a schedule of payments you can afford. If special circumstances mean you’ve had problems in the past – for example, you had an accident – then you may be able to add an explanation to your credit report.

It is important to note that you should never lie or blur the truth on an application form – it is fraud, and lenders are likely to find out, which will make it harder for you to borrow in the future.

Your credit report changes with your circumstances, so it’s important you know what it contains and that everything is current and correct. If you notice any strange activity on your credit report, such as a loan application you didn’t make or a mystery account in your name, you could be a victim of Identity fraud. So, get in touch with the relevant lender and be prepared to provide proof that you’re not responsible. And remember, the earlier you act, the better.

Therefore, check that you have everything in place by arranging a free credit report it could help you get the best deals on loans, cards, mortgages and other forms of credit. So, it pays to improve your credit rating.

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