How to Fix Your Credit Rating + What We Can Learn From the UK
Last October, the Bank of England revealed that consumer credit was rising by a staggering £900 million a month in the UK. As a result of this, the country’s outstanding credit card debt comes in at £72 billion, with this number likely to increase further against the backdrop of Brexit.
As households struggle to cope with rising debt levels, it’s little wonder that the average credit score in the UK is continuing to decline. This poses a significant issue, and one that may impact on the ability of people to buy homes, cars and similar big-ticket items in the future.
In this article, we’ll explore this further while considering the practical steps that you can take to fix your credit score:
- Check your Credit Score
Most lenders will go through two main credit reference agencies when reviewing your financial past, namely Experian and Equifax.
You can also access your live credit report through one or both of these platforms, simply by registering for an account online. From here, you can either access a free snap-shot of your credit score or pay for a more detailed report, which will explore individual accounts and provide a deeper insight into your finances.
Regardless of which option you choose, checking your credit report will help you to understand your real-time score and calculate the total amount that you owe to your creditors.
This can provide a foundation of knowledge from which you can start to manage your credit score, whilst reducing your debt burden and increasing the amount that you have to spend each month.
- Review the Finer Details of your Credit Report
Whilst reviewing your credit report, it’s important to understand that there are various factors which may impact on your score.
Although some of these may be obvious, there are others that are largely unknown and included within the finer details of your report.
One of the first things you should check is that all of your debts are registered to the correct name and your current address. At the same time, you should move to ensure that there are no mistakes on your file, as this will give you the opportunity to remove erroneous debts and improve your score accordingly.
It’s also imperative that you register on the electoral role at your current address. If not, this can have a detrimental impact on your credit score, so you should make contact with your local Electoral Registration Officer to ensure that you’re registered as quickly as possible.
- Build your Score Through Positive Transactions
If you have an inadequate credit history, it’s crucial that you look to improve your standing by engaging in positive transactions with lenders.
So while it may seem counter-intuitive, borrowing small amounts of money and repaying these on time can incrementally improve your credit score and underline your credibility as a responsible borrower.
If you have a particularly bad credit history, you may want to start by considering specialist products that have been designed to suit this purpose. You could open a bad credit bank account or take out loans and credit cards that boast minimal limits and manageable repayments.
If your score is marginally better, you could look to open a new line of credit or reactivate an account with a zero balance. You should then use this to fund small but regular purchases, before committing to repaying your debt in full each and every month.
Photo by EMprize | Shutterstock
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