Having a poor credit score can negatively impact your life and create stressful situations and unfortunate scenarios that people want to avoid. A poor credit score can make getting approval for any loan extremely tricky; often banks will refuse loans to those with a poor credit history. If you are offered a loan, you will often find that you have to pay higher rates or have more restrictive terms which can mean the loan is more hassle than it is worth.
Credit scores can also affect your employment, employers can check your credit history during the hiring process, and this could stop you getting your dream job, a bad credit rating can also make getting security clearance difficult. At home, a poor credit score can affect your ability to be able to rent a flat or house as landlords are wary of applicants who may pay late, or not pay at all.
While it may sound trivial, a poor credit rating can even stop you from getting a mobile phone contract and may even force you to pay higher insurance premiums. Poor credit affects you and your loved ones personally too, it can create a tremendous amount of pressure and strain on relationships and can make you feel stressed, worried and anxious.
Fortunately, a poor credit rating doesn’t last forever, and it is possible to rebuild your score and repair any of the problems it has. If you’ve checked your credit score and now want to make it better, here are ten of the best ways to improve your credit score.
- Check And Fix Mistakes
Unfortunately, mistakes do happen, or even worse, people become a victim of fraud. If you see unusual activity or mistakes on your credit score, make sure to challenge them by complaining to the credit reference agency. During the challenge, the mistake will be marked as ‘disputed information’ and lenders aren’t allowed you use it when assessing your rating.
- Add Your Name To Electoral Roll
Those missing from the electoral register will find it much harder to get credit. The electoral register documents your name and location so that you can be recorded to vote in Government elections. Adding yourself to the electoral roll is easy, just register to vote online or by post.
- Don’t Close Unused Accounts
A factor in credit history is how long you have had credit with creditors. If your account is inactive or unused, you will still be rewarded for a long-term positive credit history. Don’t have too many accounts open as you may be susceptible to fraud.
- Avoid Bankruptcy
Filing for bankruptcy is one of the worst things you can do to your credit score; it will be a substantial and immediate drop which can last for over ten years. While some consider bankruptcy as an easy way out to start over, it makes starting afresh tough.
- Negotiate Resolutions With Creditors
Unexpected circumstances can arise, and by and large, creditors understand this. If you cannot pay your bills, get in contact with your creditor to discuss a solution that is acceptable and meets your financial situation. The negotiation will avoid negative information being stored on your credit history and can really help you in times of financial difficulty.
- Use A Credit-Building Card
Some credit cards are designed to build credit to improve your score. The creditor loans you money on the card and you agree to a monthly fee to pay back the loan which can be as little as £50 but can make all the difference to your score. If you pay your fee back monthly, after a year your report will say you have made 12 months of successful repayments.
- Avoid Credit Repair Companies
Some businesses will offer to repair your credit history for a fee. This is costly and they cannot, legally, do anything that you can’t already do yourself. Save money and improve your score on your own.
- Plan Ahead
If you know there is a big purchase coming up, make sure to plan ahead and improve your credit score gradually, by the time you get to the purchase you’ll have months of ‘good credit deeds’ behind you as evidence.
- Stop Applying For Credit Cards
Every loyalty credit card or other credit systems will be noted as a credit enquiry and can impact your credit score for over a year. Applying for lots of credit cards in a short time span indicates money worries and can do a lot of damage to your score.
- Pay On Time
This may be harder to do, but late payments are incredibly detrimental to your score. Set up payment reminders on calendars and devices, so you are prepared for when bills are coming and when you need to pay them.