5 ideas to help fix your bad credit rating


Your credit rating is a score used by banks and lenders to determine the level of risk you pose. If you’re looking to borrow money, a lender will look at your credit score before approving or rejecting your application. A high score represents low risk, while a low rating indicates high risk. If you have a low score, there are steps you can take to improve your credit score. Here are 5 ideas to help you fix a bad credit rating.

1. Paying bills on time

If you’re on a mission to improve your credit score and maximise your chances of being able to borrow money in the future, one of the most important steps to take is to ensure you pay bills on time. If you rent or own a property, you have a mobile phone, or you have a car on finance, keeping up with monthly repayments and paying bills before you get reminders and demands through the post will increase your score. If you can keep up to date with a payment schedule or pay for the Internet or a phone every month, this shows lenders that you’re capable of taking control of your finances.

2. Paying off debts

If you have outstanding debts, this will affect your credit rating. If you’ve taken out a loan, or you have credit cards, for example, you may find that your score is low is you’ve been struggling with debts and missed a payment or you’ve amassed a large bill without clearing a substantial amount of debt. If you’re keen to improve your rating, clearing debt is an excellent place to start. Pay off credit and store cards, and make sure you don’t have any outstanding bills to cover. If you’re already in debt, and you’re not showing any signs of paying it off or reducing it, a lender may be reluctant to give you more credit.

3. Seek expert advice

If you’re at risk of falling behind with payments, seek expert advice as soon as possible. If you owe creditors, and there’s a risk that you’ll end up in court, this will have a negative impact on your credit score, and you’ll find it difficult to borrow money again. Seek expert advice and explore the options available to you. There may be steps you can take to avoid getting into a situation where you are faced with legal action.

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4. Using your account

A bad credit score isn’t always the result of getting into debt. Sometimes, low scores are a side-effect of being an unknown quantity from the perspective of the bank. If you’ve never borrowed money before, you don’t have credit cards, or you don’t use your account frequently, you may be deemed high risk by a lender because there’s no proof that you’re capable of paying money back. If your score is low, but you don’t have debts, try and use your account more frequently, and consider getting a credit card, which will enable you to boost your rating. You can set the limit at a level that is comfortable for you, and pay off whatever you put on your card on a monthly basis. This will show that you have the ability to manage your finances, and you should find it easier to get a loan or a second mortgage in years to come. It’s also a good idea to start paying bills on a regular basis. If you share a house with your partner, for example, and everything is in their name, think about changing the name on the account so that you can increase your score. You could switch the broadband or the gas bill and set up a direct debit from your account, for example.

5. Check your file

If you’ve asked for information about your credit rating, and the score is lower than expected, it’s a good idea to check your file. There may be mistakes, you could have been the victim of fraud, or your profile may be linked to another person. If you have a joint account, for example, and your partner has a poor credit rating, this could affect your personal score. It’s also wise to ensure you’re registered on the electoral roll. If your name isn’t on this register, this will make borrowing money a lot more difficult. You can sign up online in a matter of minutes.

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Do you have a low credit score? Have you been refused a loan or a credit card because of a bad credit rating? If so, there are ways of improving your rating and building a better credit history. Use your account frequently, try and pay off existing debts, and always make sure you keep up with bills and repayments. If you have a low score, or you’re in a situation where you’re anxious about being able to cover bills, seek expert advice. Finally, if your rating is lower than you anticipated, it’s worth checking your file for errors or links to other people or addresses that may have impacted your individual score.