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I had debts of £57,000 costing me £986 per month. Now all I pay is £190 per month for 60 months"
Mr Wilkinson from Stafford

Rebuilding Your Credit Rating

Being turned down by numerous credit card applications and loans may mean you have accumulated a bad credit history. Lenders will shy away from offering you loans, credit cards or mortgages as you will be considered a high risk applicant. To combat this, you can repair your credit rating by following some simple steps. It may take a long time, but it will be worth it in the long run.

Some tips to help you rebuild your credit rating;

1. Obtain you credit report

While having credit problems in the past, restoring your history is the best way to start over. Start by acquiring a copy of your credit report from the three main credit reference agencies. These are Experian, Equifax and Call Credit. You can get your copy through the post or some will provide you with a copy of the internet. There is usually a charge of approximately £2 for this. Your credit report contains information such as any outstanding loans or credit cards, any missed payments also information on any CCJ’s you may have acquired (County Court Judgments) and your general spending habits. Lenders use this data to perform a risk assessment on you when you apply for credit. At the end of the day they need to be sure if they lend you money that you will repay it.

2. Beware of credit repair companies

There are companies out there who claim to specialise in Credit repair and have the ability to clean up your credit file. Be careful! A lot of these companies charge a fee for information that can be obtained by yourself from an credit reference agency.

3. Borrow to build credit

Some people think if you have never borrowed any money in your life you will have a glowing credit rating. Wrong. If you have never lent a penny and now decide is the time to borrow, you will more than likely head into difficulty as the lender has no history of your spending habits. They do not know how reliable you are in repaying the money or if you pay back you money on time. You are pretty much invisible! It could be worth taking out a credit card and using it from time to time. Having a credit card is healthy for your credit rating. Use the card wisely though, without incurring charges or penalties. This will help you to rebuild your creditworthiness.

4. Store Cards

Store Cards can be very handy is you shop at the same store regularly. Not only will you receive discounts from time to time but you could also receive other benefits like 0% interest if you spend over a certain amount. Beware thought, Store Cards are only for the strong willed! Failure to pay you balances off in full can lead to a mountain of interest in a short amount of time. Store Cards generally tend to be higher in interest, around (30% APR!) which will mean you items will cost you a lot more if you decide not to clear your balances at the end of each month.

5. On a roll

If you move house, make sure your details on the Electoral Roll are kept up to date. Incorrect details can confuse creditors when performing a search for you and resulting in a lower credit score. Contact your local Council for details.

6. Mobile credit

If you have a contract mobile phone, make sure you keep up to date with all your bills. More than one missed payment will result in a lower credit score.

7. County Court Judgments

If your finances have gone into disruption and you have acquired CCJ’s (County Court Judgments) in your name, try pay off the debt in full and make sure that records at the Register of County Court Judgments are amended. Contact the UK Debt Advisor for help with this.

8. Make your mortgage work for you

Even if your credit rating is low, you will still have access to a homeloan, although it is likely you will have to pay higher rates of interest. Keep up with your repayments for a couple of years and your credit rating will start to improve and you will soon be able to apply for cheaper mainstream deals when you come to Remortgage.

9. Further help

For free help and advice on any aspects involving debt, contact one of our friendly advisors on 0800 043 2027 or use our free call back service.

Knowing About Footprints
Every credit card, loan or mortgage you apply for is recorded on your credit file. This is called footprints. If you apply for a lot of credit in just a short time, it is marked on your credit file and you will find it difficult to apply for more credit and eventually you will start to be refused. Be sure to leave 3 month intervals when applying for credit and don’t apply for more than 2 or 3 at a time.

Rebuilding your credit history
Rebuilding your credit history is not a 24 hour process, it takes time. But there are things you can do to speed it up. Speak to the UK Debt Advisor about your options, such as; Loans for Bad Credit, a Debt Consolidation Loan, IVA’s or even a Debt Management Plan. The UK Debt Advisor will find a solution that fits in with your lifestyle and help you to get out of debt.