Improving your credit rating

There are several ways of improving your credit rating and making yourself a more attractive prospect when it comes to applying for additional loans. Firstly, register on your council’s electoral roll, and, if you are not eligible, supply credit reference agencies with evidence of residency. Allow time between applications for credit, mobile phones or car insurance, amongst other things, because too many searches on your file in a short space of time are not conducive to improving your credit rating. If you’re planning to move, go on leave or suspect possible unemployment, apply for major credit beforehand.

Build a good credit history by applying for high interest credit cards, then use them sparingly for between six to twelve months, but ensure that you pay the full amount every month to avoid paying the interest. This should contribute to improving your credit rating and provide a suitable history, especially if you have defaulted before. Try to keep up your repayments and avoid late payments, even if you’re in financial difficulty. Contact your lender and negotiate a new repayment schedule instead of defaulting.

Do not enter into joint finances if your partner has a bad score, and, should a partnership with joint finances dissolve, inform credit reference agencies of the disassociation to prevent their history from affecting your own. When applying for a loan, request that the lender perform a ‘quotation search’ instead of a ‘credit search’ to avoid the enquiry having a negative affect on your credit score.

Another way of improving your credit rating is to become a home owner, since proof of stability is beneficial, and employees will rate higher than self-employed people. When applying for credit, a land line phone number on your application form will improve your score. If you are rejected due to an error, avoid re-applying until you have sorted out the problem, since more rejections will harm your rating. Cancel any accounts or credit cards that you don’t use, because too much available credit, even if it’s not used, will hurt your score, and pay off as much debt as possible with your savings.