When you apply for credit with a company, it will (with your consent) check your credit score through a credit reference agency, of which the three main ones are Experian, Equifax and Call Credit.
These companies hold your credit report, which shows how you have repaid credit in the past and lenders take it as an indication, of how you will repay credit in the future.
A poor credit history will limit your choice and usually means you’ll have to borrow at higher rates, but your credit history can be improved over time.
Here are five steps you can take to improve your credit rating:
1: Register on the electoral roll.
To register on the electoral roll you will generally need to complete a voter registration form and return it to your local authority. It is vital you do this every time you move house.
2: Stop applying for credit you won’t get.
Every time you apply for credit the ensuing credit search is noted on your credit report; if you have applied and been rejected several times, your credit history may be getting worse and worse.
3: Check your credit report.
This will show you the areas that you can improve on and also means you can check for any errors that might be on your report and get them changed. You may be able to obtain a copy of your credit report for free from Credit Expert.
4: Open a higher interest credit card.
You are more likely to be accepted for one of these if you have a poor credit rating. Make sure you manage it properly, through repaying every month in full, spending a little each month for six to twelve months.
Here are some examples of higher interest cards that can be used to repair bad credit:
- – aqua Card: Typical 35.9% APR variable
- – Vanquis: Typical 39.9% APR variable
- – Monument Visa Card: Typical 34.9% APR variable
- 5: Curb your card spending.
- This is the most obvious step of all, try to minimise any debt on your cards. As a rule of thumb, you should try to keep the debt on a card under 30% of your credit limit.
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