It is difficult to get a loan if your credit score is not right. If you do not have a good credit record you will not get many of the best credit card deals we mention. But fear not! Even if you have a credit record and you want to cry, there are ways to clean it up over time.

 

Things Which Can Affect Your Credit File

All sorts of things can affect your ability to get a loan or set up a loan agreement (like a mobile phone deal):

– If you have recently applied for and been denied several new loans or credit cards. Financial institutions are like sheep – if you find yourself being rejected by some other lenders, they may reject you too.

– Multiple applications for loans and loans at once can make you look like you are in a bad financial situation.

– County Court Judgments against You (CCJs)

– You are regularly delayed with mortgages or loan payments.

– If you have not paid your phone bill for a few months, this is considered a major black mark.

– Your age affects your scores. Being too young can be just as bad as being too old.

– It can be a problem if you are lonely – getting married gives the impression that you are stable and have a second income to trust.

– Keeping the same address for a long time will help.

– If you are not on the voter list you may be rejected.

However, all lenders are different and you may be wondering who will lend to you and who will not. Some lenders prefer students with a lot of loans. Others will not touch them and will only go to those who are in established jobs and own homes.

Surprisingly, many lenders will look at you with great skepticism if you have never in your life borrowed, never borrowed and never had any credit cards. Sometimes it seems you can’t win!

 

10 Best Ways to Improve Your Credit Record

1. Make sure you are on the election list

If you do not, write to your local congregation and they will send you a registration form. You can opt out of the public register for free, which means that your information will not be publicly accessible to the public. The private election list is used only by public bodies such as your local council.

2. Pay the bills on time

If you are unable to do this, contact your supplier, credit card issuer or bank immediately to discuss what options you have. You can change your repayment schedule or make a minimum refund instead.

3. Check your credit record for CCJS

Check your credit record with a credit reference agent like Experian. Indicate any unusual activity you do not recognize and contact the creditors to investigate. Most importantly, check the county court judgments (CCJs). For example, if you have recently moved house, these may be issued and missed if the summons is not received. This can be very detrimental to your score, so resolve this quickly.

4. Check any banks settled

If you have paid off your debts or have been released from bankruptcy, check your record with Experian, Transunion (formerly Call Loan) and Equifax. Fixed or deferred loans can take up to four months to show up on your record – if they are not listed after that time, contact the lending agent and lender.

5. Look at closed accounts as open

Any credit tax you pay – even a mobile phone bill – should be shown on your credit record as closed and settled. By default – or worse, if it is not displayed – contact the lender or company immediately to order it.

6. Work on creating your credit history

If you are young or have no credit history, apply for a basic credit card with a limited limit. A mobile phone deal may also help. Use the card lightly every month – about 20% of the range is a good guide – and pay for it on time every month. This will show you the responsible borrowers. Don’t use credit to buy more items: Use this for things you can buy anyway. For example, do your weekly grocery store with it or use it to pay for fuel for your car.

However, if you are unable to borrow because you have been in debt before, do not despair. You have ‘bad credit’ credit cards. The interest rate goes through the roof – usually at least 39% APR – but using a little of this every month and paying it off in full will re-create your credit history. This is actually a very slow journey, but it was worth it. Check out our Debt Restructuring article to find the best credit restructuring cards.

7. You can upgrade your credit for your rent

Leaseholders can use a credit ladder to prove that they are liable to the lender. It is also a free service for tenants to use. You report to credit rating agencies each month that your rent has been repaid in full on time. Over time, this will re-create your score as a responsible expense.

8. Use a credit developer

Just like using your rent – daily expenses – small savings can also help you recreate your debt. A credit development service like Lockbox offers you a small loan. You have no money! It is locked in your account. Each month, you make an agreed ‘repayment’ for this loan. At the end of it, the money you have paid is released into your new bank account. This is a great two-for-one: Rebuild your credit score and finish saving!

9. Stop the first rejection

If you are rejected for any loan or bank account, stop! Examine your credit record at each of the three credit reference agencies. Assuming you made a mistake on the form, do not apply again. Many rejections in a short period of time can take YEARS to type your credit record – so avoid it at all costs!

10. Help to get credit quickly

If you are already reeling under debt, do not apply for a loan. Avoid things like payroll loans in particular – they are expensive and can be very bad for lenders who look at your credit record. Instead, take a deep breath and seek help.

Set up a repayment plan by contacting the National Debt Tax or Step Change to talk about your finances. You can also find your local community money counseling center for help. Jasmine is the host of this financial education charity: they help you manage your debts and funds and get back on track.

Do You Need to Pay to Access Your Credit Report?

It is a good idea to look at your credit report from time to time to see what they have to say about you. To get their free version, contact Experian.

People who can really benefit from accessing their credit file regularly:

Anyone who has been burned in the past, for example a victim of identity theft, is concerned that it may happen again.

Check if there are any fraudulent loan applications made in their name by persons who do not trust their partner or housemates / s.

Anyone who is more concerned with their credit rating.

Chat with Experian so that they can tell you more about their services.